2019 Environmental, Social and Governance Report 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd. 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd.
About This Report Table of Contents
This report describes the actual practice of Zhejiang Dahua Technology Co., Ltd. Statement from the Chairman Environment (hereinafter referred to as the Company, Dahua, or Dahua Technology) in fulfilling
its social responsibilities while achieving its development in 2019. It also details the /04 Environmental Protection First in the Global Innovation-Driven Who We Are Development /29 Company's efforts at corporate governance, integrity management, the protection Control Measures for Green and Innovation-Driven Development /30 of shareholders' rights and interests, technological innovation, environmental Global Network /06 Use and Management of Chemicals /32 protection, and public service activities, which is intended to strengthen the Dahua Heart of City /07 Energy Management /33 communication and connection between stakeholders and the Company.
Core Products /09 Basis of Preparation Major Performance /10 This report is made according to the "Sustainability Reporting Guidelines" issued Governance
by the Global Reporting Initiative (GRI) and the "Shenzhen Stock Exchange Social Sustainable Development Management /11 Corporate Governance /35 Responsibility Instructions to Listed Companies", and the Company's actual Integrity and Compliance Management /37 situations. Anti-corruption and Anti-commercial Bribery /38
Network Security Guarantee System /39 Time Scope Social Customer Data and Privacy Protection /43 The reporting period is January 1, 2019, through December 31, 2019, and some Actions of Sustainable Development /13
information may be beyond this scope. Smart Internet of Things /14
Report Scope Smart Ecosystem /15 Business operation Smart Environment /16 The report covers the information of Zhejiang Dahua Technology Co., Ltd. and its Innovation R&D /45 Fight Against the Coronavirus Pandemic /17 major subsidiaries. Green Supply Chain /46 Public Welfare /18 Ingenious Manufacturing /49 Data Source Global Delivery and Service of Professional Integration /41 Information and cases disclosed in this report are mainly from the official documents, reports and relevant open data of Dahua and its major subsidiaries. Talent The Company's board of directors is responsible for the authenticity, accuracy, and Talent /21 Key Performance Indicators for Sustainable completeness of this report. Occupational Health and Safety Management /23 Development/52
Democratic Management /26 Data Description Appendixes: Human Rights Management /27
The Company's financial statements of this year, the related documents, and the Dahua Employee Care Activities /27 Awards and Certifications /53 company's statistics. Zhejiang Dahua Technology Co., Ltd. reserves the right to Sustainability Reporting Guidelines (GRI Standards) Index /54 interpret this report.
Release Method
This report can be downloaded from the designated information disclosure website (www.cninfo.com.cn) and the website of Dahua (www.dahuatech.com). For more information beyond this report, refer to the Company's annual report or visit the Company's website.
2 01 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd. 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd.
Statement from the Chairman
Core Values
Integrity, Dedication, Responsibility, Openness, Innovation
In compliance with the development trend of the digital economy, Dahua has accelerated the implementation of core technologies such as artificial intelligence, as well as the strategic planning and marketizaation of "Dahua Heart Vision of City", and continuously endeavored to improve such core capabilities as AIoT and SDTV. The Company has released The World-leading Video-centric the new big data platform, DAHUA GAIA, which establishes Smart IoT Solutions and Service Provider a closed loop for the customer-oriented value chain to empower different industries and lead the era of "smart twins". To adhere to our customer-centered value and better serve our customers, Dahua has launched a full-scale business transformation and management reform, aiming to enhance its systematic capabilities and operating efficiency.
Faced with the uncertainties of the global macroeconomic environment, the rapid development of new technologies, Mission and people's aspirations and demands for a better life, all Enabling a Safer Society and Smarter Dahua employees will remain fully committed to the great mission of "enabling a safer society and smarter living" and Living step up investment in technological innovation to bring safe and intelligent digital experience to cities, businesses, and individuals around the world. We are devoted to making new and greater contributions to social development and Fu Liquan environmental protection. With our mission in heart, we forge ahead with unswerving determination and keep up our down- to-earth spirits to deepen reforms.
Core Concepts
Customer-oriented, Employee-based
02 03 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd. 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd.
Who We Are
Zhejiang Dahua Technology Holdings Co., Ltd. is a world-leading video-centric smart • Released the AIoT and SDTV strategies IoT solution and service provider, offering end-to-end video surveillance solutions, • Launched the GAIA big data platform systems, and services based on technological innovation, to create value for urban operation, enterprise management and the life of individuals. Future The Company has more than 16,000 employees, over 50% of which are engaged AIOT SDTV in R&D. Since the launch of the industry’s first independently developed 8-channel • Brought in the IT common cloud technology embedded DVR in 2002, Dahua Technology has devoted itself to technological Put the smart (IoT) industrial park innovation and been continuously increasing its investment in R&D. Every year, • Set up the Imou (formerly Lechange) brand to into operation around 10% of its sales revenue is invested in R&D. The company continues to enter the civilian video surveillance market explore emerging opportunities based on the video IoT technologies and has already • Established the first overseas branch in the Unit- established businesses in machine vision, video conferencing systems, professional ed States 2018 drones, smart fire control, electronic license plates, RFID, and robotics, etc. 2019
Launched the independently developed HDCVI technology, which was subsequently 2016 Become a provider of video-centric and AI-based Listed on the Shenzhen Stock Ex- adopted by the HDcctv Alliance and change in May 20 smart IoT solutions and operation services became the first international standard in 2017 Dahua Established Zhejiang Dahua the domestic security industry HOC Technology Co., Ltd. and entered the video surveillance industry 2013 Expanded overseas busi- • Launched the new smart city architec- nesses 2014 ture —— Dahua Heart of City • Launched the European Supply Center 2010
2007 2002 2012
Obtained the CMMI5 certification, which 2008 Launched the technology of "Hard- established the company's global leading 2001 2003 ware-like Software Platforms", position in software development making large-scale deployment and maintenance easy
• Brought in the CMOS technology and launched the Launched the intelligent all-in-one trans- high-definition high-magnification camera portation solution, the records of which • Established the first post-doctoral mobile station in Invented the 8-channel audio-video synchro- become the de facto standard of China's China's security industry nization embedded DVR and created the No.1 electronic police • Established Zhejiang Dahua Security Network Opera- brand of embedded DVR tion Service Co., Ltd.
+ + + * 16000 2500 pcs 180pcs 200 pcs 53pcs No.2 employees patents countries covered by domestic offices overseas branches market share in the our products world
04 05 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd. 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd.
Global Network Dahua Heart of City
Dahua has a global marketing and service network with more than 200 offices in 32 provinces and cities in China and 53 overseas branches in Asia Pacific, North Dahua Heart of City is the engine for the development of smart cities, which is supported by the Full Sensing, Full Intelligence, Full Computing, and Full Ecosystem (4 America, Europe, and Africa, to provide fast and high-quality services to customers. Dahua products are available in over 180 countries and regions around the world. Full) capabilities. It realizes a “1 platform, 2 centers, N applications” (1+2+N) new smart city framework to benefit cities, industries, and individuals at the same time. They are widely applied to key areas such as public security, traffic management, fire control, retail, finance, and energy, etc., to enable a safer society and smarter Dahua HOC takes “giving cities the ‘4 Full’ capabilities to drive urban development, and achieving 'Improved Efficiency, Increased Benefit, and Optimized Experience'” living. as its top-level design and takes “solving customers' business pain points and creating economic, social, and business value through scientific and orderly construc- tion and operation from an overall perspective” as the principle for deepening the design.
Improve Increase Optimize Efficiency Benefit Experience
Safe CitySmart Transportation Smart Traffic Smart Energy N Applications Smart Logistics Smart Residential Area Smart Retail Smart Education
Smart Banking & Finance Smart Industrial Park
City Operations City Security Center Management Center
Comprehensive Aid Command Authorization Data Audit Supervision Policy Making and Control Management Management Management
Window to the City Public Services Risk Management Situational Awareness
Cloud SDK Safety Assurance System Safety City Big Data Platform Standard Specification System
Streaming Media Data Intelligence Big Data Intelligent Analytics Container Cloud Resource Pool Service Service Service Framework Repository Video Streaming Big Data Video Cloud AI Processing Cloud Database Processing Processing Storage
Computing Resource Pool Storage Resource Pool Network Resource Pool
Video Capture Audio Collection Face Image IoT Sensor Archive Data Geographic Information Collection Acquisition Collection Collection
06 07 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd. 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd.
Dahua Heart of City Core Products
[Full Sensing] [Full Intelligence] Development Policy Intelligent Network Perceive the scenarios of objects and Create value through the intelligent Integrate multiple IoT perception methods such as audio, radar, RFID, GIS, Realize the integrated networking of wired and wireless networks and efficient create value online models NB-IOT, and Lora, with video as the core method, and combine intelligent end-to-end connectivity to form the overall competitiveness of solutions since technologies such as deep learning, machine vision, and view structuring to the basic network can carry and connect with front-end video monitoring, Focusing on customers' business scenarios, create Provide customers with a full range of intelligent facilitate the deep integration of perception and intelligence, build an "all- transmission networks and back-end storage-display-control systems; Support a professional and efficient sensing network products, solutions, and intelligent network time, all-space, all-weather, all-target, multi-dimensional" system of intelligent unblocked transmission of massive video data, HiPoE and EPoE remote power through the video-centric smart IoT technologies, architecture to "solve customers' business pain perception products and create a "professional, efficient and accurate" supply, wide temperature tolerance, high reliability and other characteristics products, solutions. points and create value for customers" and perception network for customers. based on the professional security design, to flexibly adapt to all scenarios; to facilitate customers' business upgrade and transformation with AI. Provide visualized and unified network operation, maintenance, and Intelligent Terminal-edge-cloud Collaboration management services with high-quality end-to-end intelligent transmission Targeting customers' businesses, provide multiple types, levels, and forms of network, to pioneer the transformation of security surveillance from the [Full Computing] [Full Ecosystem] intelligent computing equipment and build up the capacities for the terminal- traditional video surveillance network into the smart AIoT network. Determine the computing power Ecosystem leads to win-win result and to-edge-to-center progressive and intelligent processing of data to deliver an according to the scenarios, and create cooperation creates value efficient application system covering the application in single scenarios and full Cloud and Big Data value through computing business collaboration. Build up a storage computing network covering cloud, terminals, and edges with Make full use of the advantage in smart IoT video IoT being the core scenario and facing the transformation and upgrade Provide customers with the top-level design and products and solutions from the perspective of the ability to deepen the design based on the creating value for customers and achieve win-win Cyber Security of customers' businesses, and create a dual-engine driven by view and data deep understanding of their businesses, and results with an open and cooperative mindset. Provide security products and solutions for all-round protection covering intelligence, to provide an application enabling platform and a big data platform enable network deployment of computing power terminal, access, network, and data security and security operation centers with a closed loop of the data value chain. Provide products and services such from single points to local and global networks, based on Dahua's rich experience and knowledge of the video surveillance as the cloud video storage that supports the four-level reliable enhancement to realize the optimal matching of algorithms and industry, to ensure that the Company can provide customers with a full range and the four-dimensional intelligent acceleration, cloud databases optimizing computing power for customers' business handling of standard video surveillance products in compliance with GB 35114-2017 and enhancing the integrated search of data in space and time, cloud platforms across the network. and personal data and privacy protection regulations (such as GDPR), etc., and supporting cloud-edge collaborative computing, cloud intelligence supporting help customers build standardized and procedure-based security assurance and full-network multi-vendor multi-algorithm collaboration, one-stop data operation management mechanisms. computing operation platform, data management and mining, etc. [1 Platform]
City Big Data Platform: Form a closed loop of the data value chain based on the targeted collection and acquisition of data from city business models, to serve businesses with data; Sense the required scenarios and make reasonable deployment for the computing and storage power to establish business models and data models for city-level businesses.
[2 Centers]
City Operation Management Center: Provide integrated supervision, decision-making support, command, and dispatch services to city administrators, to achieve centralized dispatching and efficient operation of resources; City Security Center: Provide full-dimensional comprehensive protection to the security of different levels of terminals, networks, and data, to transform the network security of smart city from "passive protection" to "proactive sensing".
08 09 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd. 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd.
Major Achievements Sustainable Development Management
Currency: RMB Dahua strives to carry out sustainable development activities and pursues steady sustainable management, aiming for "becoming the world's leading provider of video-centric smart IoT solutions and operation services" and "enabling a safer society and smarter living". Video surveillance in the security field has undergone Increase/decrease fundamental changes from the traditional ex post investigation to ex ante prevention, prediction, and early warning. Such changes contributed a lot to efficiency im- 2019 2018 compared with last year provement, cost reduction, and risk control, and also gave more meanings to our mission.
Operating revenue (RMB) 26,149,430,652.42 23,665,688,106.22 10.50% Sustainable Development Strategies Sustainable Development Policy Net profit attributable to shareholders of the listed 3,188,144,692.55 2,529,426,468.61 26.04% company (RMB) Dahua will continue to improve our core capabilities such as AIoT and big data Respect the value of the Company, business partners, and employees, and Net profit attributable to shareholders of the listed centering on "smart twins" and enhance our abilities to commercialize new comply with regulations, international standards, and internal rules and regu- company after deducting the non-recurring profit 3,016,953,888.25 2,495,121,029.76 20.91% technologies. We are committed to creating greater value for our customers lations. Strive to create value in corporate governance, social issue handling, and loss (RMB) and play a greater role in the sustainable development of the society. environmental protection, talent development, and public welfare investment. Net cash flow from the business activities (RMB) 1,600,604,287.70 955,315,978.17 67.55%
Basic earnings per share (RMB/share) 1.10 0.87 26.44% Dahua Environmental, Social, and Governance Management Committee
1.10 0.87 26.44% Diluted earnings per share (RMB/share) To ensure the realization of the systematic sustainable development strategies of Dahua, build a management mechanism and a company-level management system for sustainable development, and promote fair trade, the establishment of a supply chain ecosystem, corporate security and health protection, labor management, Weighted average return on equity 22.74% 22.16% 0.58% environmental management, and social contributions, etc., Dahua proposed to establish a company-level environmental, social, and governance management com- mittee. Increase/decrease at the At the end of 2019 At the end of 2018 end of this year compared with that of last year
Total assets (RMB) 29,564,650,212.93 26,350,599,778.15 12.20%
Net assets attributable to shareholders of the listed Environmental, Social, and Governance 15,643,007,027.91 12,618,758,918.48 23.97% company (RMB) Management Committee Director: Executive President Note 1: The data above are arranged in the order of data in the consolidated statements Note 2: The data above come from the 2019 Annual Report of the Company Secretariat: System Quality Department Operation Management Center Research center Administration Center Finance Center HR Center Process & IT Center Legal Department Internal Audit Department Supply Chain Management Center Securities Investment Department CenterDelivery and Service Domestic Marketing Center Overseas Marketing Center Quality Management Center Branding Department
10 11 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd.
Actions of Sustainable Development
In September 2015, world leaders passed the 2030 Agenda for Sustainable Development at the United Nations Summit. The Agenda covers 17 sustainable develop- ment goals, which came into effect on January 1, 2016. SOCIETY Social
Actions of Sustainable Development
Intelligent Internet of Things Dahua has developed detailed action plans for these 17 projects. To make sure that the sustainable management goals are fully implemented, the Company's sus- Intelligent Ecosystem tainable development management committee will review the performances.
Intelligent Environment Sustainable Development Goals Dahua's Actions Fight Against the Coronavirus Pandemic · · No poverty Establish a social security system for employees of Dahua and improve employees' welfare Promote tar- geted poverty alleviation Public Welfare Zero hunger ·Provide abundant diets for employees·Sponsor public welfare undertakings
Good health and well-being ·Provide smart hospital solutions·Create good working environment·Reduce occupational casualties
·Provide smart education solutions High-quality education ·Develop good corporate training systems and provide equal training sessions and resources to male and female employees Gender equality ·Increase the proportions of female managers and employees
·Provide the smart ecosystem solutions Clean water and sanitation ·Ensure the availability of safe clean water and sanitation facilities, decrease water pollution and maintain facilities water resource management ·Improve the utilization rate of recycled water
Affordable clean energy ·Provide intelligent energy solutions·Enhance energy efficiency at production bases
Decent work and economic · ·Protect labor rights and interests growth Provide high-quality jobs and increase investments in creating more jobs
Industry, innovation, and · · infrastructure Create Dahua Heart of City Provide smart manufacturing and logistics solutions
Reduce inequality ·Democratic management·Human rights governance
Sustainable cities and ·Create Dahua Heart of City·Provide smart community and industrial park solutions communities Responsible fire control and ·Provide smart fire control solutions·Enhance waste recycling in production production
Action on climate change ·Provide smart ecosystem solutions·Reduce carbon emissions
Underwater creatures ·Provide smart ecosystem solutions·Reduce the scale of maritime transportation
Terrestrial creatures ·Provide smart ecosystem solutions·Protect wild life
Peace, just and strong ·Provide smart policing, traffic control, transportation, judicature, emergency solutions institutions ·Implement human rights policies and declarations for supply chain operators
Partnerships that promote the ·Provide financing solutions to supply chain operators achievement of goals ·Build advanced quality management incubation bases
13 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd. 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd.
Actions of Sustainable Development Actions of Sustainable Development Intelligent Internet of Things Intelligent Ecosystem
Improved rate and efficiency of crime solving Full-dimensional Early Warning Enhances the Timeliness of Rescue Optimize Disease Diagnosis and Treatment Processes Innovative Smart Classroom Contributes to Teaching
Cloud policing and intelligent crime prevention Big Data Helps Fire Control Facilitate Medical Health Empowering Education
With in-depth insight into the businesses of police units and combat Dahua Smart Fire Control is based on the “all-process, all-staff, all-di- Guided by the smart hospital evaluation system issued by the Nation- Based on the "Overall Framework of Smart Campuses" and combined units, Dahua smart policing enhances their information-gathering mension, and all-day” fire control management and with an in-depth al Health Commission, Dahua Smart Hospital makes use of Dahua's with the "1+2+N" design concepts of Dahua Heart of City, Dahua ability and operational capabilities, builds new online smart policing understanding of various businesses such as fire control supervision, core technologies in video IoT and advanced technologies such as AI, Smart Education realizes various intelligent scenario and data appli- models and improves their ability in forecasting, early warning and fire fighting and rescue, and integrates intelligent fire fighting equip- sensing, big data, and cloud computing to realize actual smart opera- cations through IoT sensing, across-network intelligent analysis, and prevention, precise strike, and dynamic management, and compre- ment such as fire fighting robots and intelligent smoke detection tion of hospitals. The overall plan centers on smart services and smart cloud computing, and provides a comprehensive solution for campus hensively enhances the information-based application and work device, etc. to build the integrated smart fire control system and efficiency of policing. prevent fires. management, which can effectively ease the current problems of hos- information-based construction that integrates smart security, smart pital services, such as low public satisfaction and poor management rear services, smart teaching, and campus big data. efficiency.
Reduced rate of traffic offenses Promote the Efficiency of Transportation Security Operations
Orderly Smart Traffic Management Safer Transportation Production visualization, AI intelligent analysis Equipment Operation Digitalization Dahua Smart Traffic Control has gone deeply into the traffic man- Dahua Smart Transportation aims the seven sub-industries of trans- agement business and aims to improve the command and operation portation, namely, air, track traffic, highway, road, transport, railway, capabilities for traffic control. Dahua fully implements the traffic harbor, and shipping. It mainly focuses on vehicles, transport hubs, Intelligent manufacturing deepens transformation Energy Management management reforms, and builds a modern "Four in One (intelli- and travelers and uses big data, intelligence, and visualization, and gence analysis and assessment, efficient flat command structure, other methods to improve the level of comprehensive transporta- Dahua Smart Manufacturing focuses on various business processes Taking the architecture of "online data, closed loop for decision-mak- precise mobile service, and real-time supervision)" police service tion security operations, transport services, and operational effi- of enterprises, such as design, production, management, and oper- ing, 'all-process, all-staff, all-dimension, and all-day', 'clean energy mechanism. It drives the reform of the traffic control mechanism ciency from two dimensions( transportation safety and convenient ation. Through the use of new technologies such as the Internet of supply, intelligent energy supporting facilities, electrified energy and the enhancement of efficiency. Through establishing systems travel services). Things, big data analysis, and artificial intelligence, it provides various consumption, and sharing of energy services' and two centers" as the for snapshots of over-speed and under-speed vehicles, short pass- advanced applications such as machine vision, AGV robots, AI intelli- design concept, and in consideration of enterprises' production pro- ing distance and vehicle cloud control, it realizes such functions as gent analysis, and big data platforms to facilitate the transformation cesses, business division, and business scenarios, Dahua Smart Ener- vehicle speed management, track following, and real-time analysis from large-scale and standardized production to personalized and gy improves the safety management of all production processes, the and early warning to help the construction of the highway traffic intelligent manufacturing. monitoring and early warning of production and operations, resource accidents prevention and control system, continuously improve road management, accident investigation and governance and compre- traffic order, and effectively prevent and reduce traffic accidents. hensively enhances enterprises' intelligent production capabilities.
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Actions of Sustainable Development Fight Against the Coronavirus Pandemic Intelligent Environment
body solution to ensure the measurement accuracy of the camera through real-time black-body tem- Real-time Accurate Monitoring Full-dimensional Panoramic Surveillance perature correction. It can narrow measurement errors within the range of ± 0.3°C for tempera- ture measurements between 30°C ~ 45°C; and Grid Monitoring of the Atmospheric Environment Protect Wild Life in relatively stable indoor environments, such as train stations, airports, subway stations, hospitals, enterprise parks, schools, and other places, it can By using 4G, the Ethernet and other network transmission methods In the 13th Five-Year Plan, China has promoted ecological civilization achieve a difference within ± 0.1OC from that taken and through the atmospheric environmental quality monitoring to be a national strategy. As a responsible enterprise, Dahua has tak- with medical thermometers. No close contact is system, Dahua collects and transmits the real-time environmental en practical actions to promote ecological protection. required, and the temperature measurement effi- temperature, humidity, noise, dust, PM2.5 \ PM10 particles, and Dahua has participated in the construction of intelligent ecologi- ciency is greatly improved. It effectively reduces the risk of cross-infection caused by crowd gathering other data to the management platform. And then it superimpose cal protection system in the local "ecological window" programs. and better protects the on-site staff. data onto the video screen to integrate site scenes and atmospheric Through intelligent video analysis, it can realize intelligent detection, Through repeated verification of users' demands environmental quality data, which makes information clear. If there analysis, and counting of wild animals in conservation areas, realize and the practical applications, Dahua's ul- is any abnormality, an alarm can be issued to notify the relevant the close observation and study of the migration and other activities tra-high-precision thermal imaging body tempera- ture measurement solution has been successfully personnel so that it facilitates real-time and efficient environmental of rare wild animals, such as Tibetan antelopes, Tibetan wild don- applied in Hangzhou East Railway Station Metro quality monitoring and exception handling for the environmental keys, snow leopards, Chinese horned antelopes, bar-headed geese, Station, Shanghai Railway Station, Shanghai Hongq- departments. black-necked cranes, and Eurasian otters, and achieve the real-time iao Airport, Shanghai Pudong International Airport, counting for such migrations. This contributes greatly to the inves- Dahua Makes Efforts to Prevent and rials and equipment, the Company completed the Shijiazhuang Metro, Shanghai municipal govern- ment, Shanghai Public Security Bureau, Hubei tigation of conservation areas and reduces the workload of manual Control the Coronavirus Pandemic development of a variety of equipment such as the body thermal imaging system, in a short period. Hanchuan Hospital, Central South University Xiang- counting. Since the novel coronavirus outbreak occurs, Dahua On January 21, Fu Liquan, Chairman of Dahua, ya Hospital, Shanghai Thoracic Hospital, Pudong has actively participated in the prevention and con- responded quickly to the government's policy and Development Bank Hangzhou Branch, Agriculture trol: decided to set up a company-level emergency re- and Commerce Bank Shanghai Branch, the building On January 22, Dahua set up an emergency re- sponse team. On the same day, the RD center for of China Mobile in Guangzhou, the headquarters of sponse team and proposed the Dahua thermal pandemic prevention and control was set up. Shanghai Port Group, Fudan University, and other imaging body temperature measurement solution, On January 22, a company-level pandemic pre- places. It has helped to contain the spread of the which provided strong support to relevant depart- vention emergency team was established and the virus in different places, received wide acclaim and ments in taking prevention and control measures thermal imaging body temperature solution was recognition, which is an evidence of our practical (such as body temperature measurement) in key proposed. actions against the virus. places. On the New Year's Eve on January 24, members of With the ultra-high-precision thermal imaging body On January 24, Dahua completed the manufactur- the Company's R&D, SDT, supply chain, and other temperature measurement system, Dahua always ing of the first batch of infrared thermal imaging stands ready to join in the battle and uses tech departments all joined in the team and the first - detection equipment and contacted the officials of batch of thermal imaging body thermometers was nologies and services to fulfill its corporate social the Zhejiang Provincial Economic and Information produced. responsibilities. Office to express our desire to donate emergency On January 25, that is, the first day of the Lunar medical supplies worth RMB 5 million to Zhejiang year, the core development team worked late until Province. Dahua Video Conferencing System in Smart River and Lake Monitoring Use of Data for Fire Fight and Control midnight on the optimization of the body tempera- On January 25, Dahua donated RMB 5 million in ture measurement products. the Fight Against the Pandemic cash to Wuhan Charity Federation. So far, the total On January 29, the draft of the thermal imaging In response to the government's call to resume amount of money and supplies donated by the body temperature preliminary screening solution work with zero contact, Dahua integrates its video AI Helps to Protect Rivers and Lakes Man-machine Collaboration to Efficiently company and its subsidiaries for the control of the was finalized and promoted to the whole country conferencing system with advanced technologies, Control Straw Burning disease has exceeded RMB 10 million. as an overall solution. Hangzhou East Railway such as artificial intelligence, big data algorithms, As of March 1, Dahua has donated 43,500 masks Station Metro Station became the first pilot area 4K high-definition video, and thermal imaging, to Dahua Smart River and Lake Monitoring System, as an important Dahua employs the infrared thermal imaging camera to conduct the and 400 sets of protective suits to Wuhan Traffic in China for the use of the Dahua thermal imaging provide the efficient remote online communication Police departments, 2,000 N95 masks and 76,000 technical method for flotsam control, has been successfully applied 360° 7×24 automatic monitoring of straw burning. Detection of such body temperature solution. platform for video conferencing, which is widely surgical masks to the Zhejiang Charity Federation; in multi-region projects and achieved full coverage of key local rivers, incidents will be immediately reported to the central platform, and During the Spring Festival holiday, Dahua's core used in emergency command, telemedicine, re- 10,000 masks and 61 sets of Dahua thermal imag- team members have worked without rest, despite mote meetings, remote law enforcement, remote which can realize more efficient flotsam monitoring and improve the the fire alarm message will be instantly sent to the law enforcement ing body temperature equipment to the Red Cross all kinds of difficulties, and devoted themselves to inspections, and remote caring, etc. water quality of rivers. department in the corresponding area for handling. When the sys- Society of Binjiang District. the front-line of the fight against the pandemic. During the pandemic outbreak, Dahua Video Con- This system helps the local water affairs departments change their tem is completed, it will transform the fire detection model of the They have tackled various problems day and night ferencing System has played an important role in previous river patrol model, which was found slow in flotsam detection, straw burning monitoring from manual patrol to automatic camera Shoulder our Social Responsibilities with fearless and arduous determination. With many industries such as judicature, public security, time-consuming and labor-consuming. It greatly improves the efficiency inspection. and Fight Together Against the Disease practical actions, we fight against the pandemic. emergency management, and finance. With wide applications in emergency command, telemedicine, of flotsam cleaning and reduces the environmental hazards brought by When facing the challenges of the virus outbreak, Dahua Ultra-high-precision Thermal remote meeting, remote law enforcement, remote Dahua fulfills its corporate mission of "enabling various kinds of flotsam (such as household waste) to rivers. inspections, remote caring, and other scenarios, a safer society and smarter living" and makes full Imaging Solution Supports the Front- it has served as a powerful network connecting use of its strengths to fight the battle. Chairman line during the Peak Period of Return different nodes of disease prevention, control, and Fu Liquan said that every Dahua employee should Journey treatment and provided support to the orderly shoulder the responsibility for making a safer soci- work of all aspects of society. ety in such a special period. After the outbreak of the pandemic, the non-con- tact thermal imaging and rapid screening of sus- Moreover, Dahua has worked together with China Based on the demands for the prevention and pected cases in crowded places has been an effec- Telecom to develop the E-Cloud conference plat- control of the pandemic, Dahua launched the tive method for the prevention and control of the form, which has provided services to the SASAC ultra-high-precision thermal imaging body tem- pandemic after work resumption. Meanwhile, the Information Center, the Ministry of Industry and perature measurement system with the goal of non-contact temperature measurement can ensure Information Technology, the Health Commissions "high precision, large coverage, multi-target, and a rapid pass-through and reduce crowd gathering, in many regions, and various government agencies long distance". Our team undertook the mission, which further reduces the risk of cross-infection. for the pandemic prevention. Facing the pandemic, gave up the spring festival holidays and family re- Dahua will never shirk our responsibility to protect union, and spent 27 days and nights to fight off the Dahua ultra-high-precision thermal imaging body the safety of the people and the "fighters" on the challenge. After having overcome difficulties such temperature measurement system adopts a front-line of this battle. as the lack of manpower and the shortage of mate- high-precision thermal imaging camera and black
16 17 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd. 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd.
Public Welfare
We are committed to serving the country worthily with industry, actively advocate a culture of responsibility, vigorously support national and local public welfare programs, as well as encourage and support employees to carry out charity activities for the publicood. g We have developed an investment plan for the public welfare in order to take the responsibility of being a “member of the society” through continuous participation in public welfare activities, while at the same time dedicating ourself to being a successful “business entity”.
Public Welfare Activity | Charity to Aid Students
On October 23, 2019, Dahua Technology conducted charity work to provide aid, through Education and Science Bureau of Danzhai county, Guizhou province, for excellent students of underprivileged families from four junior high schools of Danzhai county. Dahua Spring Breeze Student Aid Fund was established and various school supplies were purchased, such as insulation cups, schoolbags, pencil cases, pencils, and notebooks.
2015 Purchased shoes, flashlights, and stationeries worth of RMB 46,520 yuan to aid 633 students of Xichang Wutong Trees Primary School Public Welfare Activity | [Love 1 + Clothing] Clothing Donation to De- liver Warmth 2016 Assisted students in need from Wutong Trees Primary School On November 5-7, 2019, Dahua employees raced to offer their kindness and deliver warmth. A total of over 500 suits of winter clothing were received, among which over 300 Donated campus monitoring devices worth of RMB suits were donated to “Yamansu Kirgiz ethnic township in Wushi county, Aksu prefecture, 2017 70,000 yuan to Anhui Left-behind Children's School; and donated 28 sets of computers to Binjiang Mi- Xinjiang province” through related channels from Lions Clubs, and the rest over 200 suits grant Children's School were directionally donated by the company to “Shanyangtou village in Long Ping township, Jianshi county, Enshi city, Hubei province”. Dahua Technology holds clothing donation every 2018 Donated 42 sets of computers to Anhui Left-behind year. For five consecutive years since 2014, more than 7,000 items of clothing have been Children's School; funded Binjiang Primary School donated. to set up a Maker Center to aid students through science and technology
2019 Donated RMB 23,000 yuan to needy students of Danzhai county, Guizhou province Public Welfare Activity | Support for Disaster-Hit Areas
On August 10, 2019, Ningguo city in Anhui province suffered the most serious hit by the 9th Super Typhoon “Lekima”. Mountain torrents broke out in many areas. Nearly 100,000 peo- Public Welfare Activity | Voluntary Blood Donation ple were affected by the disaster across the city where houses were damaged, crops were flooded, roads and bridges were destroyed, power supply and communication were cut off, On July 25, 2019, the annual voluntary blood donation activity organized by Dahua Technology was carried out to pass on the power of life with love. A total of 305 and many residents were trapped. Dahua Technology instantly carried out charity activity people joined blood donation and the total amount of blood donated was 90,750 ml. Dahua Technology holds voluntary blood donation in mid-to-late August every for disaster relief to support people in the disaster-hit area. Dahua's Office in Anhui pur- year. For four consecutive years, the total amount of blood donated was 206,695 ml, and the total number of qualified blood donors was 753. Donate blood to help chased mineral water, canned congee, rice, cooking oil, and other supplies, and had them those in need, pass on hope with true heart of love, and cheer for life with passion. delivered to Ningguo disaster relief site on August 16, hoping to help Ningguo live through difficulties with this modest contribution.
Public Welfare Activity | Donation for Poverty Alleviation
Dahua Technology responded actively to the national initiative of donation for poverty al- leviation, and carried out projects such as offering to sell agricultural oductspr for Danzhai county, the “10,000 enterprises assisting 10,000 villages” campaign of Hangzhou city, and the street lighting project and safe village project for poverty-stricken villages based on the company's own business.
18 19 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd.
Focus on Key Talents
While making business innovation and undertaking responsibilities for shareholders and employees, Dahua Technology always remembers to shoulder the social responsibility. It stresses the importance of increased focus on human values during management, emphasizes enterprise's contribution to environment, consumers, and society, and continuously puts these perspectives into action. We are committed to the “customer-centric and striver-oriented” cultural concept, constantly im- proving the talent development and training system, and the compensation incentive system. At the same time, we actively organize a series of activities on "striving for success together and staying healthy together", promoting attitude to work and live healthily, and caring for every Dahua striver. In 2019, Dahua Technology won the titles of "Extraordinary Employer", "Most Influential Employer", "Model Employer in China", "Favoring Talents Employer", “Model Employer to Attract and Retain TALENTS Talent ", and more. Talent
Focus on Key Talents
Occupational Health and Safety Management
Democratic Management Human Rights Management
Exciting Activities to Care for Dahua Strivers
Innovative Recruitment Efforts to Focus on Key Talents
In terms of the competition for talents in AI field, Dahua Technology has tak- en the full advantage of technology resources offered by Dahua post-doctoral scientific research workstation and presented the AI strength and future development of Dahua to outstanding students from various universities through the form of AI technology partner salon, achieving satisfactory re- sults with this strategy to attract talents through experts in the field.
In the meantime, Dahua Technology delivered the most intuitive and au- thentic employer brand information to each college student through various online and offline activities such as cloud recruitment and brand star power, and fully presented the most cutting-edge R&D technology and enterprise environment to each prospective employee, meeting the diverse needs of different groups of audience. Stock option incentive Employee stock ownership Comprehensive Compensation and Welfare System for Key Mid-and- plan Talents Motivation and Retainment long-term Innovation and investment platform Dahua Technology has always dedicated itself to constant improvement of incentives Interest-free loan for the comprehensive incentive system that takes full consideration of employ- house purchase ees’ material and spirit, as well as short-term and long-term needs, aiming to Compensa- enhance the competitiveness of employee compensation, and optimize the Short-term Project bonus welfare system and health security based on employee needs. Subsidies tion and incentives Welfare In 2019, the company has completed the grant of reserved restricted stock for the “2018 Restricted Stock Incentive Plan” to further attract and retain Physical examination/com- outstanding management talents and business backbones, and mobilize the mercial insurance enthusiasm and cohesion of employees. To meet the diverse welfare needs Welfare Supplementary holiday/ of employees from all levels and age groups, and to improve the autonomy travel benefits Flexible welfare (Holiday/ for welfare program implementation, the company set up a flexible welfare birthday coupons) platform to improve employee satisfaction and enhance employees' sense of belonging to the company.
21 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd. 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd.
Focus on Key Talents Occupational Health and Safety Management
Diversified training system to enhance employees' competitiveness By the establishment of ISO14001 and OHSAS18001 management systems, the company conducts internal and external audits and management reviews on a regular basis to effectively control the risk factors to the environment and occupational health & safety as well as running activities relating thereto, so as to reduce waste, Dahua Technology regards talents as valuable assets of the company. Talent Through operation of the special committee, the company enables employees lower cost, apply strict control, prevent pollution, effectively utilize resources and energy, fundamentally eliminate or lower the risks to the environment and occu- strategy is a significant part of the company's strategy. Talent is a crucial factor to be clear on learning standards, paths and resources, so as to continuously pational health & safety, and ensure compliance with the policies and objectives for management of the environment and occupational health & safety. In the mean- for the company's success, and also an important cornerstone and guarantee improve employees' capabilities comprehensively, laying a solid foundation time, the company has ranked the first batch of National AAAAA-Class Enterprise with Good Standardizing Practice and Grade II Qualification of Safety Production for the long-term development of the company. for employees to assume “responsibility” once on-boarding and continue with Standardization, achieving management standardization, field standardization, as well as operation standardization, and continuously reinforcing its achievements. “contribution” on the job. The company continuous to improve its talent management system and opti- mize the dual development path of both management order and professional The company attaches great importance to talent training and practice, and as- order. The supporting systems centered on “capability”, “responsibility”, and sists in the "business success oriented, organization development centered, and “contribution” are also optimized to drive talents to keep growing and realize personal growth based" training philosophy. In addition to introducing external self-value on the company platform. System improvement: knowledge system and excellent practices, the company is more attentive to the Organizational structure and system development for occupational health & safety management · Continue to improve the job qualification system centered on “capability” systematic development of internal knowledge system and practice cases. At The company has a safety management committee that observes strictly with the relevant provisions of national and local laws and regulations, to strengthen oc- · Continue to improve the post placement management centered on “responsi- the same time, managers at all levels within the company take part in the train- cupational health, safety and environmental management, consistently improve the management mechanism, and protect employee safety and company property. bility” ing development and lecturing, aiming to "utilize talents to cultivate even better The company strictly follows relevant regulations, and has formulated corresponding rules and regulations such as "DH QP 020 Environmental Health Operation · Continue to improve the personnel and post matching management centered talents". Management Procedures", "Safety Production Management System", "DH-BPR-BS-463-S01 Company Safety Management System", and "DH-BPR-BS-463-G01 Safety on “contribution” Management And Prevention Guidance", which have clear requirements, as well as distinct reward and punishment standards, consistently improving the ability of safety production and environmental management. At the same time, the working committee of safety production was established to consistently improve the man- agement organization. All personnel have signed the responsibility statement of safety production at different levels, with clear safety objectives and responsibilities Leaders Learning Section for Leadership and Management Training Business Scenario Training cation Study Professional Qualifi detailed to individuals. Annual assessment is conducted. In addition, the company increases surveillance on high-risk sites through reinforced management of techni- cal safety measures at production site. As a result, safety production is in sound condition and under continuous improvement. No safety production accidents have occurred in the past three years.
The Spark Project Youth Training System - New Employee Training
Safety Management Committee Director: President Project Library Question Bank Case Library Lecturer Pool Mentor Pool Group members: BMT member
Implementation and E-learning Platform Operation Specification Operation Secretariat: General Manager of Administrative Center
Meanwhile, Dahua Technology takes great efforts to focus on the capability improvement and development of different employee groups, and customize diversified
training plans for employees. Center Management Branch of Research Marketing Center Management Branch of Domestic Sales Center Management Branch of Overseas Dahua System Engineering Co., Ltd. Management Branch of Zhejiang ang Dahua Zhilian Co., Ltd. Management Branch Zheji of Departments and Subsidiaries Management Branch of Other
Talent Development Talent Training
Business Center Training Unit RTT GM-HiPo Project Group for Project Group for Excellent Regional High Potential ... Management Capability Professional Competence ... Business Talents Management Talents Improvement Improvement -
During the reported period, the total training hours of Dahua employees reached 480,000 hours, and the total training cost was RMB 4.32 million yuan.
22 23 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd. 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd.
Occupational Health and Safety Management
The company adheres to the policy of “Safety first, prevention centered, and comprehensive treatment” to carry out safety production management, establishing a harmonious, safe and enlightened production environment.
Safety production system construction · Perceive Potential Hazards and Ring the Safety Alarm
The company obtained OHSAS18001 Occupational Health and Safety Management System Certification in 2010, and was rated as “Grade II Enterprise of Safety Simulated potential hazards, such as electric shock and crush that may occur in the Production Standardization” in 2018. To ensure the effective operation of the system and to control or eliminate potential environmental impacts and occupational production process, to establish safety awareness through employees' personal ex- health and safety hazards, on one hand, a series of policies, such as “Safety Production Management System”, “Production Operation Specification”, “Equipment perience. Safety Management System”, and “Hazardous Chemicals Management System”, are utilized to detail safety standards and work specifications to guide employee for standardized operations. On the other hand, the matrix organizational management model is adopted, so that the safety management committee of the base implement various of safety-related working responsibilities specific to each post, to organize regular safety meetings, regular safety inspections, fire drills, and other safety themed activities. Director of Safety Production Committee
Deputy Director of the · Dahua Intelligent Clinic Providing Daily Health Services Secretary Safety Committee Dahua intelligent clinic is composed of all-in-one intelligent mobile medical machine, intelligent medicine cabinet, and online and offline monitoring service system, pro- Safety Committee Member viding long-term diagnosis and treatment of common diseases and basic physical examination for employees at the park. Emergency Committee Park Security Guards Committee Member Catering Committee Dorm Management
Safety Management Monitoring System
Safety management system is an important branch of safety governance. Based on the “five elements” of people, machine, material, environment, and manage- ment, A safety management system for park safety is established in compliance with requirements such as safety standardization and HSE, offering real-time, highly integrated, and classified management and enabling timely warning of dangers to quickly locate the exception and reduction the scope and level of dangers.
Living Quarters Factory Districts of Production Base
· Entrance and exit vehicle management · Automatic visitor control Vehicle People Safety Specialist · Parking lot vehicle management · Automatic control of production · Automatic dispatch of warehouse vehi- station and environment cles and goods · Intelligent access control and con- Safety Management and Prevention sumption management
The company attaches great importance to safety production and increases the investment on management resources. Regular activities for employees, such as oc- cupational safety education and training, emergency drills, joint defense between the police and enterprises, fire drills, safety activities, knowledge communication, · RFID warehouse access management · Electronic inspection system and hazard identification, are carried out to advocate early hazard identification and prevention, as wellas effective hazard management. Material · Machine room environment monitoring management · Control center dispatch (stereoscopic (temperature and humidity, UPS, etc.) management and control) June 2019 is the 18th "Safety Production Month" in China. Dahua labor union, together with safety committee of Dahua Fuyang Park, organized a series of activities · Automatic control of hazardous goods · Park and production data control for 2019 "Safety Production Month" in Fuyang production base. Centering on the theme of "risk prevention, hidden dangers removal and accident containment", warehouse various forms of interactive activities, such as safety knowledge training and communication, safety knowledge essay competition, snapshot of identified hazard, scanning QR code to answer questions, were organized and carried out in order to reinforce safety awareness, strengthen perception on safety production, and moti- vate all personnel to pay attention to safety production and participate in safety supervision. These efforts led to environment safety improvement at the park and its surroundings, as well as increase of safety production level and continuous stability of safety production condition at the park.
Security Practices In order to effectively maintain normal operation order of the park, and ensure property interests, personnel safety and R&D safety at the park, Dahua Technology · Perceive Potential Hazards and Ring the Safety Alarm has established Security rules and regulations based on Regulations on the Supervision and Inspection of the Internal Security and Safeguard for Enterprises and Pub- lic Institutions by Public Security Organizations, Regulation on Internal Security and Safeguard for Enterprises and Public Institutions, and others. The main contents Carried out fire knowledge training, drills, and rescues to improve fire safety aware- include: ness and self-rescue ability through professional guidance. · Security guard responsibility, duty system, handover system, and rewards and punishments system; · Security guard manual; · Emergency response of security guard; · Service courtesies and more.
24 25 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd. 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd.
Democratic Management Human Rights Management
Dahua labor union is set up by Dahua Technology to actively develop and implement democratic management, safeguard employees' democratic rights, foster In business practice, the company values principles of human rights as stipulated in Universal Declaration of Human Rights, International Conventions on Economic, harmonious labor relations, and promote healthy development of the enterprise. Social, and Cultural Rights, International Conventions on Civil and Political Rights, and United Nations Guiding Principles for Business and Human Rights. The internal 2019 Social Responsibility Management Manual is developed according to policies and objectives listed in SA8000 International Standard and Social Accountability, and efforts are made to incorporate these regulations into daily workflow and policies, so as to improve value of the company's overall business activities. The company respects employees' rights of freedom of association and collective bargaining that are in accordance with national laws and under voluntary conditions, Dahua Labor Union protects employees' personal information and privacy, and clearly prohibits all possible illegal employment practices such as employment of child labor, forced labor, and restraint of freedom.
Exciting Activities to Care for Dahua Strivers Labor Dispute Mediator Labor Law Supervisor Funds Audit Committee Protection Supervision Chairman of the Labor Vice Chairman of the Committee Member The company is dedicated to the promotion of cultural atmosphere, and keeps experimenting with more diversified platforms and innovative media interactions. The Inspector of Labor Female Employee
Labor Union employee culture system ranging from offline to online, headquarters to region, and region to global has been gradually established, enabling more Dahua fellows to Member
Union feel and practice the “customer-centered and striver-oriented” company culture.
“Striving for success together and staying healthy together”. Each striver is valuable to the company. The series activity on “Healthy season, striving season” was initiated in 2019, to let employees attach more importance to healthy living and healthy working, and to make every striver's efforts visible.
Employee Health and also receive an unique Children's Day gift, Sports Club The series of healthy season activities include BMI The company sets up all kinds of sports clubs and test, sleep and mental health tests, lectures from organizes various activities to enrich employees' The company continues to innovate format of democratic management, provide employees with relevant information through more channels, and enable immediate experts and doctors, monthly free visit from TCM spare time life, strengthen their physique, and interactions and feedbacks. When setting up rules and regulations related to attendance appraisal, performance appraisal, employee rewards and punishments, experts, and the first session of the most beautiful spending a happy and memorable holiday. cultivate their sentiment. salary payment, social insurance, welfare treatment, labor contract, and safety production, the company will seek inputs from labor union and employee track event. These activates bring employees the representatives by making information public on company office system or in written format. awakening of self-awareness, the acquisition of health knowledge, as well as the comprehensive The company sets up electronic or bulletin boards at eye-catching positions of canteen, elevators and floors, and regularly updates the contents according to the focus on health both mentally and physically. actual situation of each department, including latest events of the company, operation and management updates, and development of the company. A public platform at company level has been set up on the company's internal website. Messages such as important announcements, personnel appointment and dismissal, system release, and enterprise news are published to all members of the company. Information such as technology, quality, and rationalization proposals can also be queried thereon. At the same time, an employee forum is launched, facilitating employees to express their views, and participate in online communications and Promotion of Healthy Growth of discussions. And also the company culture are promoted to employees in ways that are welcomed by them. The chairman of the board, the chairman of the labor Children union, and the internal audit department make their email open to public, as a way to facilitate employees to express their opinions, suggestions, and feelings, which also enable the superior leaders to understand the actual demands of employees more efficiently. On July 22, 2019, the opening ceremony of the second Dongzhou neighborhood Dahua "Little Practice on Waste Sorting Migrant Bird" event was held in Dongzhou district The female employee committee safeguards the legitimate rights and interests of malefe employees according to the law, focusing on the protection of female Waste sorting is closely related to our lives, and the of Fuyang. This summer camp was organized by employees during their menstrual period, pregnancy, maternity period, and lactation period, as well as their special interests such as forbidden labor, health care, habit of waste sorting is an important manifestation Dahua labor union and Dongzhou Center Fraternity and maternity insurance. of urban civilization. Dahua labor union organizes Kindergarten. Dahua Little Migrant Bird class various wasting sorting activities as a response to is aimed to offer summer care activities to the Hangzhou's appeal of household waste sorting, Healthy Life children of migrant workers. Social resources are leading the new fashion of waste sorting. In 2019, the company's physiotherapy room fully integrated through cooperation between and baby care room was further upgraded and district and enterprise, to ensure that the "little renovated, to pay more care for special groups and migrant birds" are cared for and well cultivated, bring healthy experience to employees. All kinds helping new generation of Dongzhou children with of dating parties, such as “Looking for the special healthy growth. someone in this big world”, were conducted to help employees with their love and marriage issues. On every Children's Day, the company organizes Dahua special activity to invite children to visit the company with their parents to witness the exciting working environment where their mom and dad strive ahead every day participate in a variety of interesting outdoor activities, enjoy the delicious food specially prepared for them,
26 27 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd.
Innovative Development and Global Layout Based on Environmental Protection
Dahua Technology is committed to improving the overall competitiveness of the enterprise through continuous investment and cultivation of technological inno- vation power. While focusing on technological innovation, Dahua takes environmental protection as an important foundation for business operation and makes unremitting efforts to satisfy customer demands with high-quality products and services. In the process of active exploration of the overseas market, Dahua contin- ues with its global layout by utilizing its comprehensive advantages in technology research and development, project design, service support, and green operation, further realizing its green expansion and business upgrade in the global market.
ENVIRONMENT Green Development Strategy Risks and Opportunities Dahua Technology is always committed to environmental protection and pro- With increasing requirements for environmental regulations related to the con- duction of green products. While focusing on providing quality products and trol of hazardous substances in electronic and electronics-related products, as Environment services, Dahua Technology introduced and established environmental and oc- well as environmental responsibility, as the first company to pass the ten-ring cupational health management system, hazardous substance process manage- certification of security industry and the first batch of companies to be listed ment system, and energy management system, to safeguard employee health, on government green purchase list, Dahua Technology performs environmental protect environment, produce green products, and minimize the adverse controls on the whole process of product design, device selection, production impacts on environment from production activities, fully assuming its social responsibility of green and sustainable development. service, and after-sales service. Products sold overseas also meet the require- Innovative Development and Global Layout Based on ments of laws and regulations relevant to international environmental protec- Environmental Protection In the meantime, Dahua Technology actively explores and experiments in tion, and have obtained more than 30 Chinese and international certifications, effective environmental control schemes, as well as set up green product man- Green Innovative Development Control Measures such as CE, RoHS, Reach, and WEEE, setting up the foundation of trust with agement platform (GPM) to make green production and hazardous substance interested parties and improving the market position and reputation of the management intelligent and informationized. Dahua Technology thoroughly company. Chemical Usage and Management identifies relevant laws and regulations of environmental protection, and active- ly promotes environmental protection education for all employees to foster a Energy Management green working environment and atmosphere. Product Environmental Quality
Dahua Technology thoroughly identifies with relevant laws and regulations from Environmental Guideline the beginning of product design and production, and attaches great importance to the requirements of hazardous substances limit as listed in certain instruc- tions related to environmental compliance, such as ROHS (Restriction of Hazard- “Advocate Advocate green policy and set up green mecha- ous Substances) and REACH SVHC (Registration, Evaluation, Authorization and green nism to comprehensively improve the environ- Restriction of Chemicals). At present, among the six categories of products in intelligent mental awareness of employees and suppliers. video camera, server, monitor, all-in-one machine, network hard disk recorder, Incorporate environmental protection require- and monitor offered by Dahua Technology, there are about a thousand product Internet of ments into product research and development, lines that have obtained China environmental labeling product certification. In Things and product manufacturing, and intelligent Internet addition, more than a thousand products included in the Management Cata- lead the of Things solutions, promoting research and de- logue of Standards for the Restricted Use of Hazardous Substances in Electrical and Electronic Products innovative velopment of green technologies, and ensuring have completed the system compliance declaration on develop- the continuous and effective operation of the the public service platform for the restricted use of hazardous substances in electrical and electronic products, presenting and promising to the public that ment of en- hazardous substances management system in the process of full range industry penetration the use of hazardous substances in the products has met the relevant standards, vironmental Measures for the Control of the and expansion, so as to practice green manufac- as well as the requirements of regulations in the Restricted Use of Hazardous Substances in Electrical and Electronic Products. protection” turing and lead green development. The public can search for relevant information on public service platform at http://chinarohs.miit.gov.cn/selfDeclaration/queryDeclaration. Furthermore, a “Continue Attach great importance to the sustainable variety of products with different specifications and models produced by Dahua to meet co-development of human and environment. Technology comply with the requirements on recovery rate, reuse rate, and customer In the process of global market expansion and recycling rates as indicated in WEEE (Waste Electrical & Electronic Equipment of business upgrade, observe strictly with various European Union). demands national and regional environmental laws and and under- regulations, international conventions, and di- take global versified customer demands for environmental social protection, improve customer's comprehensive responsi- service ability, and ensure product compliance. bility with Minimize the adverse impacts on environment and human health and safety while making courage” profits to be accountable to shareholders and assuming legal responsibility.
29 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd. 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd.
Green Innovative Development Control Measures
By establishing the Hazardous Substances Process Management System (HSPM) and the environmental certification scheme, Dahua Technology has made active Supply Chain Management approach to offer sufficient response to the regulations of the use of hazardous substances in electrical and electronic products by customers in the global market Dahua Technology attaches great importance to delivering on its corporate social responsibility with its supplier partners. While promoting green sustainable de- represented by the European Union. velopment, it also drives the supply chain to jointly contribute to the sustainable development of society. Dahua has formulated hazardous substance control pro- cedures such as the DH-BPR-BS-694-S01 Dahua General Hazardous Substances Control Regulations V1.0 and the DH QP 055 Dahua General Hazardous Substances Restriction Requirements for the pro-environment management and control of the supply chain, and conduct related procurement strictly in accordance with process requirements. In order to identify site risks as early as possible and provide guidance for the supply chain, Dahua has formulated theDH-BPR-PTP-046 Production System Certification Supplier Approval Management Process to conduct on-site multi-party pro-environment appraisal of suppliers in terms of SQE, procurement and R&D, and to reg- The company introduced and passed OHSAS18001 Occupational Health Management System Certification, ISO14001 Environmental Management System Certifica- ulate suppliers' sustainable development management through various channels such as suppliers' self-inspection and annual audit, thus building a green supply tion, SA8000 Social Accountability Standard Certification, QC080000 Hazardous Substancesocess Pr Management System Certification, and ISO50001 Energy Man- chain. agement System. It has also obtained a number of green product certification, such as Five Star Certificate of Green Supply Chain Assessment and Type I Certification of China Environmental Labeling. The company strictly observes the requirements of QC080000 Hazardous Substances Process Management System and ISO14001 Environmental Management System, and evaluates possible environmental risks brought by products beginning from research and development phase of the proj- ect. Corresponding product development procedure documents have been developed to increase the construction investment on pollutant treatment facilities and Green Manufacturing manage waste gas, waste water, and solid wastes generated in the production process in strict accordance with the rules. Dahua Technology deems it as its duty to protect the environment by producing green products, and promoting green manufacturing in all business processes to reduce the utilization of environmental resources or reduce unsafe factors.
Green Production Green Logistics Green Product Design Recycling
· The lead-free production pro- · Environmentally friendly · Products meet related domes- · Returned products and de- cess is adopted, and wastewater packaging materials are used to tic and international laws and fective products are consumed and exhaust gas is subject to reduce ecological pollution regulations on environmental internally by the Company/ the environmental assessment protection or product safety, employees after being tested before being discharged · Recyclable packaging and with RoHS, Reach, or WEEE by professional recycling work- pallets are used to maximize certificates shops, and recycled in different Environmental Type I Product Certification QC080000 Certificate Green Supply Chain Evaluation Certificate · Minimize resource waste: recycling categories by professional Quota management of product · Green packaging material recycling companies after being materials · Paperless receipt and handover technology: e,g. the 2019 film disassembled, to improve the by barcode scanning, with data packaging patent featured by recycling rate Green Product Management Platform · Conserve energy and reduce interchange and sharing variable uses, lowered resource The Green Product Management Platform (GPM) is a cross-platform IT system independently developed by Dahua Technology, dedicated to more effectively and consumption: Thermal-insulated losses such as PE, and easy comprehensively managing the green pro-environment features of products. This tool has fully realized the transition from the previous passive, manual and frag- exterior building walls; ener- · TMS smart vehicle deployment recycling mented environmental protection management to an intelligent and open environmental management platform fully integrated with existing business processes, gy-saving frequency conversion is adopted to reduce vehicle greatly promoting the standardization and systematic process of environmental protection design, avoiding negligence caused by manual operations, improving the control system; cooling water idling and waiting · Focus on preference for efficiency of green product management, reducing the risk of excessive harmful substances in products, lowering management costs, and enhancing customer satis- circulation and rain water reuse low-power devices faction. system; LED lighting, and par- · The VMI goods collection mode tition sound and light control; and regional supply warehouse · Minimize material consump- base energy control platform distribution mode are adopted tion of structural parts while to reduce logistics resource ensuring the functions Product consumption Develop- Business Opportunity Design, Development and Verification of Designs Manufacturing Product Life Cycle (PLC) ment
Environmental Quality Demand Management Visualized Data Integration Customer Support GPM Green Product Management Management Green Transportation
Customer environmental The atmospheric environment is seriously polluted by the substantial increase in traffic. Dahua's green transportation mainly include centralized distribution, re- Collection of regulations Supplier approval Material import Device identifi- BOM convolu- Change man- management protection agreement cation tion agement Data interaction review source consumption, and reasonable planning of transportation routes. Resource consumption refers to controlling the energy consumption of transportation means in goods transportation. Reasonable planning of transportation routes Sampling inspection Online environmental Diversified customer demands for Regulation Regular sampling inspection Platform protection declaration aims to complete transportation through the shortest route. environmental protection trend of chemical substances update PLM for incoming materials Basic Industry-specific environmental database Compliance information requirements Online Disposal process for output Green Installation and Utilization substance abnormal incoming declaration Reports and environmental goods No negative impact on the external environment, such as noise, dust, and other pollution, will be caused by the installation and utilization of products produced by Dynamic tracking Compliance infor- Technical documentation mation update statistics EBS delivery Dahua. The materials and accessories used for installation are also environmentally friendly, generating waste in a small amount and fully degradable.
Substance declara- Data update process Environmental knowl- Data interaction OA SCP tion process edge base
30 31 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd. 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd.
Chemical Usage and Management Energy Management
Hazardous Chemicals Management Wood Packaging Materials Dahua Technology establishes, implements, and continuously improves its energy management system in accordance with the requirements of the GB/T23331 En- The selection of materials and suppliers for hazardous chemical required for The solid wood pallets used in logistics are handled and labeled based on envi- ergy Management System. "Process Approach" and "PDCA Model" are adopted for the energy review of all processes involved in the corporate operation, and are production strictly complies with the supplier approval management rules, ronmental protection, according to the International Standard for Phytosanitary continuously improved for their effectiveness. and the materials selected meet environmental protection requirements. Measures (ISPM)#15: Guidelines for Regulating Wood Packaging Material in Meanwhile, storage warehouses are set up as the storage bases of chemicals, International Trade to ensure that the wood used meets international logistics Dahua Technology has adopted a series of energy management measures to define energy-saving controls over the entire consumption of energy such as electricity and natural gas in the main production process, supporting production process and auxiliary production process. A decision system based on objective data is estab- and designated persons are assigned to carry out inventory management and requirements. control. Additionally, the Chemical Management System is set up to standardize lished to comprehensively and meticulously improve energy efficiency from the macro to the micro, management to implementation. Refined energy management is the entire business process of selecting materials from suppliers - storage - practiced to further enhance energy management and reduce production and operation energy consumption. warehouse in and out - scrapping. The Company enables functions such as electricity and gas energy consumption metering and billing, report analysis, constant online monitoring of energy consump- · Seek potential suppliers, carry out site inspections, tion, and energy diagnosis and analysis, providing managers with comprehensive energy management services, to improve their efficiency and level of energy man- review their corporate qualifications and sign related agreements in accordance with the supplier approval agement and reduce operation and maintenance costs. The monitoring and measuring equipment required for energy management are calibrated and maintained Supplier mechanism, to ensure that materials meet environmen- in accordance with the Monitoring and Measuring Equipment Control Procedures, and relevant recorded shall be saved, to ensure that the data provided by these tal requirements and are delivered after being approved Selection in evaluation equipment for monitoring key features is accurate and reproducible.
· Establish hazardous chemical warehouses according to the MSDS management requirements, equipped with the corresponding temperature and humidity control, anti- Water Management Shaping A Pro-Environment Culture Hazardous explosion function, and leakage prevention; Solid Waste · Dahua Technology has established a strict water management system in accor- Dahua Technology strives to create a green, safe and harmonious environment, Chemicals Employees are trained to be qualified for the Electronic/Electrical Waste Management management of warehousing in and out, as well as on- dance with the production process and relevant local laws, regulations and stan- since the corporate sustainable development is inseparable from the enhance- site labeling Storage Dahua has formulated a recycling plan in advance for waste electronics/electri- dards, to use water in a scientific and rational way, and improve the efficiency ment of employees' environmental protection awareness. An energy-saving and cal appliances generated due to quality issues or product expiration to minimize of water utilization comprehensively. The Company actively adopts advanced emission-reduction atmosphere is created through ways such as announcing its · Goods are inspected by designated persons before en- the generation of electronic waste and reduce operating costs. The recycling tering warehouses for their quantities, packaging status, water-saving technologies, selects water-saving equipment and appliances, in- environmental management strategy through the corporate portal, uniformly Hazardous leakage status, and MSDS availability. process of electronic/electrical waste, including material return, material accep- stalls water-saving and spill-proof devices, to reduce water consumption and in- setting up office computer screensavers to publicize its pro-environment policy, · Anomalies and hidden dangers are reported for the tance, disposal evaluation, disposal process, and scrap management has been Chemicals timely treatment by security officers. crease the reuse rate of water resources. Meanwhile, the Company also actively releasing energy conservation and consumption reduction initiatives, optimizing Warehousing standardized to achieve full control of the entire recycling process. advocates the water-saving culture and creates the water-saving atmosphere, equipment operating parameters, and setting up energy-saving and consump- to further strengthen the conservation of water resources. tion-reduction administrators, to help employees improve their awareness of Electrical & Electronic Equipment Scrapping · Strictly control the means of transportation and sin- environmental protection in a subtle way, and enable employees to work in a gle collection quantities of hazardous chemicals when During the product development process, the components are evaluated in The Company starts with staff awareness by training all its new and old employ- robust and sound environment. Hazardous warehousing out terms of the 3R (Reuse, Recycling and Recovery) rates to ensure compliance ees on water-saving awareness and methods, and continuously promoting ener- Chemicals · Operators wear necessary protective gears according to the level of danger exposure. with EU's WEEE (Waste Electrical & Electronic Equipment) requirements. In Warehous- gy conservation and emission reduction within the Company. In the meanwhile, addition, WEEE registration is carried out in related overseas markets such as designated persons are assigned for patrol so that any problem once found can ing-out Germany, the United Kingdom, and the Netherlands, with agreements signed be rectified in a timely manner. The wastewater of the Company is mainly do-
· Hazardous chemical waste should be placed in fixed and relevant fees paid. Dahua also entrusts local professional institutions with mestic sewage and the canteen oily wastewater is discharged to the municipal Hazardous storage places, and transferred to qualified suppliers formal recycling qualification to recycle waste electronic and electrical equip- water pipe network after being treated in oil separation tanks according to the under long-term cooperation contracts for disposal. Waste Treat- ment generated in the local market life cycle. Integrated Sewage Discharge Standard. The discharged water body is annually ment detected and analyzed by the Binjiang Water Quality Analysis and Monitoring Station, and all indicators turn out to meet the relevant national standards.
Management of General Chemicals Exhaust Emission Management Precursor chemicals shall be recorded in and registered with the Public Security Dahua Technology is a high-tech research and development enterprise, and Bureau, and their use shall be registered and reported as needed. The dispens- uses international advanced equipment and technology for production. Its ing glue used in products is non-toxic and meets environmental protection workshops are equipped with exhaust systems to collect waste gas uniformly. requirements. Chemical waste liquids are regularly recycled and treated by pro- Testing agencies regularly conduct on-site inspections and output the Industrial fessional and qualified agencies. Exhaust Gas Inspection Report, showing that all indicators have met national relevant standards. Dahua has installed fume purification devices certified by Packaging Material Management the environmental protection department to deal with oil fumes from canteens, Dahua Technology implements green packaging design, optimizes the packaging which is fully processed before being discharged. structure, and reduces packaging materials; it improves the universality of pack- aging materials and reduces idle products during switching; packaging materials can be collected, processed, and recycled to reduce environmental pollution. All packaging materials are regulated for hazardous substances according to the requirements of the EU94/62/EC Packaging and Waste Packaging Directives to ensure that the total content of lead, mercury, cadmium and hexavalent chro- mium therein does not exceed 0.01% (100 ppm).
32 33 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd.
Corporate Governance
In strict accordance with relevant laws and regulations such as the Company encourage its directors, supervisors and senior managers to fully perform their Law of the People's Republic of China, the Securities Law of the People's Repub- duties. In 2019, the Company organized 10 board meetings, 8 supervisors meet- lic of China, the Code of Corporate Governance for Listed Companies, the Rules ings, and 3 shareholders meetings, with the focus on items including foreign Governing the Listing of Shares on Shenzhen Stock Exchange, and Guidelines of investment, connected transaction, external guarantees, and external financial the Shenzhen Stock Exchange for the Standard Operation of Listed Companies assistance. on the Small and Medium-sized Enterprise Board, as well as the requirements of regulatory agencies, the Company has built a highly efficient corporate gov- During the report period, the independent directors of the Company look close- ernance structure to protect the interests of shareholders and other interested ly at corporate operations and perform their duties independently in accor- party with the management system, and continuously improve the Company's dance with relevant rules, laws and regulations, proposing many professional GOVERNANCE value and management transparency. opinions on the improvement of the corporate system and daily operation de- cisions, and thus playing their due role in perfecting the corporate supervisory Shareholders mechanism and safeguarding the interests of the Company and shareholders, Meeting Audit Committee especially those of public stocks. For more information pertaining corporate Governance governance, please refer to the “Corporate Governance” section of the 2019 Annual Report. Strategy Committee Stakeholder Identification and Communication Board of Supervi- Board of Directors sors Nomination The Company attaches great importance to communication with stakeholders: Committee For customers, perfect the complaint handling mechanism to improve customer Corporate Governance service and experience; for shareholders, build communication channels that Senior Management Remuneration and cover shareholders of different levels through various activities such as surveys Integrity and Compliance Appraisal Committee and investor exchange activities; for the public, spread social responsibility prac- tices through the official website and official Weibo; for employees, improve Anti-corruption and Anti-commercial Bribery Shareholders·and·shareholders·meeting: The·Company·standardizes·the·- the employee training system and the salary incentives, insurance and welfare calling,·convening,·and·voting·procedures·in accordance with·the·reg- system, and open channels for employees to express their opinions; for the Network Security Guarantee System ulations·and·requirements·of·the· Regulatory Opinions for the General environment, invest in energy conservation and emission reduction and step up Assemblies of Shareholders of Listed Companies,·the·Articles·of·Associa- protection of the natural ecological environment. tion·and·the·Rules·of·Procedures·of·the·Shareholders·General·Meeting.·As- Customer Data and Privacy Protection sociated·shareholders·shall·avoid·voting·when·relevant·issues·are·being·dis- The Company has organized multiple investor relations activities for the in- cussed·during·these·meetings,·and·connected·transactions·are ensured to depth exchanges with investors in various ways, forming good interactions. be·fair·and·rational·without·harming·the·interests·of·shareholders. Treat all During the report period, more than 100 daily surveys were received on-site. shareholders equally to ensure that shareholders, especially minority share- In addition, the Company participated in 36 external strategy meetings, and or- holders, can fully exercise their rights. General·meetings·of·shareholders·are·- ganized 2 annual large-scale investor exchange activities, interacting with more convened·by·the·Company's·board·of·directors·and·witnessed·by·lawyer(s) on- than 4,000 domestic and foreign investors. More than 200 hotline calls and 155 site. interactive questions were answered. Company and controlling shareholders: The·Company·is·independent·- from·its controlling·shareholders·in·terms·of·business,·personnel,·assets,·fi- nance·and·organizations.·The Company's·board·of·directors,·board·of·super- Expectations and Demands Responses and Actions visors·and·other·internal·institutions·operate·independently.· The controlling Interested Party shareholders of the Company are able to strictly regulate their behaviors, Satisfactory return on investment, Increase profitability without any behavior that directly or indirectly interfere with the Company's good market value Strengthen investor relations man- decision-making and business activities beyond their general meetings, or any Shareholder Full knowledge of corporate opera- agement tion Improve information disclosure non-operational behavior of appropriation of the capital of listed Companies. mechanism Directors and board of directors: The Company currently has seven directors, including three independent directors, all of whom are experts in fields such as A variety of products Increase technological innovation Excellent service and enrich product lines corporate management and financial accounting. The number and composition Customer Good quality Improve service quality and help of the board of directors meet the requirements of relevant laws and regula- customers succeed tions and the Articles of Association. The board of directors convenes board Continuously invest in R&D and meetings and implements resolutions of shareholders meetings in strict accor- advanced technology empowerment dance with the Articles of Association and the Rules of Procedure of the Board Partner Fair procurement Open and transparent procurement of Directors. All the directors conscientiously perform their due duties and- at Integrity and reciprocity mechanism tend board meetings and shareholders meetings, and safeguard the legitimate Partners adhere to the principles rights and interests of the Company and shareholders. of equality, reciprocity, and all-win harmony Supervisors and the board of supervisors: The Company currently has three supervisors, including two employee supervisors. The number and composi- Employee Good career development plan- Improve the employee training tion of the board of supervisors meet the requirements of relevant laws and ning and incentives system, regulations and the Articles of Association. The board of supervisors convenes Basic rights protection salary incentive, and insurance and welfare system supervisor meetings in strict accordance with the Articles of Association and the Rules of Procedure of the Board of Supervisors. All the supervisors perform Government Compliance with law Strengthen compliance management their duties conscientiously, and effectively supervise and express independent Drive sustainable and healthy Comply with national regulations and opinions on the legitimacy and compliance of the performance of the corporate economic development policies Serve public finance and govern- Abide by national development finance, directors and senior managers in an integral, diligent and conscientious ment development strategies manner, to safeguard the legitimate rights and interests of the Company and Pay taxes according to law, and shareholders. operate with integrity Specific members of the committees under the board of directors: Community Focus on community develop- Actively engage in public welfare Nomination Committee: He Chao (convener), Wang Zexia, and Fu Liquan; ment Carry out volunteer activities Remuneration and Evaluation Committee: Huang Siying (convener), Wang Zexia, Build a harmonious community and Fu Liquan; Environment Focus on climate change and Build advanced factories featured by Audit Committee: Wang Zexia (convener), Huang Siying, and Chen Ailing; support for low-carbon economy environmental protection and energy Strategy Committee: Fu Liquan (convener), He Chao, Wang Zexia, Wu Jun, and Advocate energy saving and saving Zhu Jiangming; emission reduction towards a Invest in energy saving and emission conservation-oriented society reduction During the report period, the Company adopts a variety of meeting forms to Cultivate environmental concepts ensure the smooth convening of the three important meetings, and actively
35 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd. 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd.
Corporate Governance Integrity and Compliance
Evaluation of Material Issues As a global commercial entity, Dahua Technology has always practiced legal and compliant operations with strict adherence to the Code of Conduct, market discipline Dahua conducts materiality assessment through media research and interested party surveys. Issues are prioritized from the perspective of internal and external in- and international rules, having established a business-oriented compliance operation management system. terested parties, and key sustainability management issues are reviewed, to identify issues for the Report. The identified issues will be evaluated in accordance with the GRI Standards Guidelines and prioritized to ensure the balanced content of the Report. In order to ensure its standardized development, legal and compliant operations, effectively prevent and respond to global compliance risks, and continuously im- prove its internal control and governance structure, the Company established the company-level compliance management organization in accordance with relevant laws and regulations as well as corporate systems, as a decision-making and operation compliance management unit, including an operation management commit- Step 1: Identify material issues tee and multiple professional execution groups.
Identify material issues with reference to multiple dimensions, Importance for interested parties Environ- 20 mainly including the selection of disclosure content of ESG reports 15 1 ment 13 21 of counterparts, the focus of MSCI rating index, and the focus of 17 18 2 Gover- internal interested parties and the public media on the Company. 12 19 23 22 4 nance Step 2: Evaluate material issues 26 16 10 Code of Conduct Export Control 11 25 Social The evaluation of material corporate ESG issues is the foundation 9 With its core concept of “integrity, dedication, responsibility, openness, and As a globally operating company, Dahua is committed to complying with rel- 24 27 8 6 3 and important link of ESG management, which defines the priority 28 14 5 innovation”, Dahua requires all employees at all posts, full-time or part-time, evant export control laws and regulations in the countries and regions where 30 Social of ESG risk management and control. advisory or temporary, China or overseas, to strictly comply with the require- it operates. At the organizational level, Dahua has set up an export control 7 29 Step 3: Make the list of major indicators ments of laws and regulations and high standards of ethics in their business group. Under the leadership of the company-level compliance management Talent Based on the degree of influence on Dahua and the interests of activities. Dahua has issued the Code of Conduct, which requires that every committee, it organizes, formulates, and implements internal systems and work interested parties, 11 material issues and 19 moderately material employee strictly abides by the laws and regulations of China and relevant re- processes in export control to ensure that export control compliance policies issues have been selected. Importance for business gions in business activities, and also defines specific requirements and guidance and processes are implemented in a comprehensive and effective way. The regarding protecting the working environment and corporate property, ensuring Company has established an internal compliance control system for export con- fair competition and fair transactions, avoiding conflicts of interest, protecting trol, covering aspects of the inspection of sanctions lists at home and abroad, the privacy of inside information, and reporting illegal or professionally uneth- the determination of material and product control attributes, the management ical behaviors, among others. The Code of Conduct is a crucial chapter of the of regulated product sales processes, the risk assessment of regulated product Environment Governance Social Business operation Talent Chinese version of Dahua's Employee Handbook. Dahua requires that all new procurement, the risk assessment of cooperative project development, audit, 1. Environmental 15. Public welfare 19. Sustainable economic 25. Occupational health and 11. Integrity and compliance employees in China must study and execute it when they join the company. and violation correction, etc. This system is embedded in the various business management activities growth safety management This also composes part of the assessment for their official employment after systems of the Company to strengthen management and control in an informa- 2. Green and innovation- 12. Anti-corruption and anti- 16. Local economic 26. Talent attraction and 20. Innovative R&D probation, to evaluate their understanding of and compliance with the Code. tion-based manner. Dahua requires all its employees to abide by the compli- driven development commercial bribery impact development This Code has been continuously revised in accordance with the changes in the ance requirements, and ensures that employees from the top to bottom of the 3. Use and management of 13. Network security 17. Solutions to social 21. Clean technology 27. Diversity and inclusivity corporate operating environment and the need for lean management. Dahua corporate ladder all have correct understanding of and strict compliance with guarantee issues chemicals management released the English version of CODE OF CONDUCT for overseas employees and export control compliance policies and control processes through publicity and 14. Customer data and privacy 18. Epidemic 22. Common development foreign employees, which further emphasized local laws and regulations and training. Meanwhile, Dahua also actively participates in training and seminars 4. Energy management 28. Employee benefits protection containment with partners high standards of business ethics on the basis of the Chinese version to ensure organized by relevant official institutions at home and abroad, and establishes 29. Respect for human rights and the normalization of Dahua's operations around the globe. The English version, sustained and stable cooperative relations with external law firms, so as to con- 5. Water management 23. Smart manufacturing labor practices as a document signed by overseas employees when recruited, shall also be fully tinuously optimize its export control compliance efforts. 6. Greenhouse gas emission 24. Professional integrated understood, comprehended and strictly practiced. 30. Happy work reduction delivery Fair Competition 7. Noise management Dahua advocates fair competition and fair transactions, complies with anti-un- 8. Hazardous substance fair competition and anti-monopoly laws and regulations applicable when con- management ducting business at home and abroad, and actively performs anti-trust review that its business may involve. Whether in the Chinese version or the English ver- 9. Waste management sion of the Code of Conduct, Dahua always seeks fair and integral competition, and aims to develop its competitive edge through quality products and services 10. Green supply chain rather than unethical or illegal business practices. In order to continuously abide by laws and regulations on its business, the Company maintains close contact with local law firms at places where its business is conducted, and operates ac- cording to their professional advice and guidance. As of the date of this Report, Dahua has not had any lawsuits involving unfair competition or violation of antitrust laws. In its overseas investment projects, the Company strictly fulfills its antitrust review obligations in accordance with the requirements of various governmental institutions.
36 37 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd. 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd.
Anti-corruption and Anti-commercial Bribery Network Security Guarantee System
Dahua sticks to honest operation, punishes corruption with "zero tolerance", and continuously strengthens the building of its anti-corruption and anti-commercial The integrated development of the five core technologies, namely, cloud computing, big data, IoT, artificial intelligence and 5G, pushes human society into the era bribery management system in four aspects: risk prevention, risk identification, risk response, and post-risk recovery. The Code of Conduct will govern relationships of intelligent IoT. While emerging technologies are advancing human progress, the open network architecture also generates new threats and challenges. Network among Dahua employees as well as its customers, suppliers, shareholders, competitors, and communities where it operates. The Code requires employees to com- security has become an integral topic in the development of the Internet of Things. As a video-centric smart IoT solution provider and operational service provider, ply with laws, regulations and ethics in all business dealings, and to follow relevant rules of the Company, their department and the their business areas. It clearly Dahua is facing up to the challenges of network security with a positive, open, responsible, and cooperative attitude and philosophy. stipulates that in the business dealings with customers, partners and suppliers, and in the handling of gifts and entertainment, employees should act in a manner that complies with laws and regulations, in line with business ethics and common business practices. Employees are prohibited from providing or accepting gifts or Considering the rapid development of the industry, we believe that the investment video surveillance vendors used to make in network security is not enough to business entertainment that exceed the rational standard or violate corporate policies. Employees are prohibited from accepting bribes, kickbacks, or secret com- handle the growing challenges. Dahua has recognized the importance of network security for the improvement of global customer quality and the development of missions. In addition, the Code also requires all employees to strictly comply with all applicable standards, laws, regulations, and policies for accounting and financial the company, and thus incorporated network security improvement into its strategic action list. It has established a cyber security product with more professional reporting, estimation and forecasting for the transactions, and emphasizes employees' obligation to report violations. The Company has established the complaint technology and larger staff scale, bringing together security experts. Under the leadership of the Company's cyber security committee, the systematic protection of and reporting channel, and formulated the Administrative Measures for Reporting Corrupt Practices, to clarify reporting methods, reporting channels, effective re- Dahua's full range of products is consolidated, and security solutions and safe operation guidance are provided for video surveillance networks, dedicated to provide porting elements, and report handling. It encourages employees and related parties to report any behaviors that violate laws, disciplines, regulations or professional more secure products and solutions for customers, and faster security emergency services. ethics against Dahua or Dahua business, promoting trust and transparency within the Company. Any employee behaving in violation of the Code of Conduct will be subject to corresponding disciplinary action with his/her superior(s). If required by law, Dahua must report the violation to the appropriate government agency, and employees must provide assistance to ensure that the violation is identified and resolved in a timely manner. Meanwhile, exposed internal control loopholes shall be promptly rectified by relevant persons in charge. Systematic Professional Security Team We establish a systematic professional security team to make sure cyber securi- supply chain, service and legal service. This group quickly implements our cyber Dahua incorporates the requirements related to anti-corruption and anti-commercial bribery into its Suppliers' Commitment to Integrity, and requires all suppliers to ty in all execution units through the hierarchical organization structure, covering security resolutions in every business system of the company. sign this Commitment. The Complaint and Reporting Channel have been publicized on the corporate website, and integrity reminders are sent to suppliers on holi- research, product, market, supply chain, delivery and service systems. The cyber security product line of the research center is a physical organization days to show Dahua's unswerving determination in the anti-corruption and commercial bribery efforts. The Company has always set the relevant topics on "Honesty for research and implementation of Dahua cyber security technology, formula- and Integrity" as one of the compulsory training courses for new employees, promoting its integrity policy and further elaborating the definition of violations and As a supreme decision-making organization of cyber security, our cyber security tion of security process, and development of security solutions. It is responsible related punishments through cases of integrity. A total of 2467 persons attended this training in 2019. This course has also been gradually available to various subsid- committee is the leadership decision-making institution of cyber security under for the implementation of product security demand, security design, security iaries. the leadership of the Board of Directors and is responsible for overall planning, test and incident response, design and development of security solutions, and coordinating, guiding and monitoring cyber security work at a strategic level. design of product security process. In 2019, Dahua joined the Trust and Integrity Enterprise Alliance, established a clean administration account, and continued to conduct clean administration publicity We set a cyber security engineering group for every product line to facilitate activities to continuously enhance employees' integrity awareness, and promote their integrity and self-discipline through education, systems and supervision. Look- As a joint executive team across business, the cyber security execution group is the implementation of security research capability and security technology in ing ahead to 2020, Dahua will continue to write and publicize integrity cases, establish a clean administration interview room, further work with legal institutions to responsible for leading discussion and formulating mechanisms and strategies all products through intimate interaction among the cyber security product line conduct public security and prosecution publicity training, establish the corporate integrity day and related activities, and organize deterrent activities such as prison relevant to cyber security at a tactical level, and for developing, tracking and and the cyber security engineering groups of all production lines. visits. In addition, anti-corruption propaganda is carried out within the Company in the form of special reports in the "Dahua'er" magazine. processing daily cyber security at an executive level. It covers research, market,
Complaint and Reporting Channel: E-mail: [email protected] Tel: 86-0571-28816326 Research center Cyber Security Committee
Under no circumstances will Dahua allow any retaliation against any reporter who, in good faith, believes that certain actions may violate applicable laws, rules and Cyber Security Product regulations. Any superior or other employee who threatens or impose sanctions on any reporter will be subject to penalties including disciplinary action and even Line dismissal. Big Data/Cloud Security Engineering Group of Big Data/Cloud Security Engineering Group of Big Data/Cloud Security Engineering Group of Big Data/Cloud Security Engineering Group of Research center Domestic Marketing Center Overseas Marketing Center Supply chain Legal Department Securities Investment Department CenterQuality Service
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38 39 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd. 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd.
Network Security Guarantee System
Processed Management of SDLC Security Software Development Life Cycle Continuously Evolved and Comprehensive Security Baseline With combination of technology and process, Dahua is positively establishing and improving a security assurance system for products and solutions. For the product Since the “Security Baseline” plan was launched in 2016, Dahua has been insisting in digging deep into the product security technologies and being committed to research process, we are establishing a full set of SDLC security research management systems by reference to the best security events in the industry and imple- “Provide best function experience with default security technology guarantee.” menting them in the research system. Through efforts of the professional securityeam, t the capabilities on the whole process covering security demand, design, coding and test of products and solutions are improved and the security strategies are implemented to ensure that all the products are developed in compliance With iterative explorations and feedbacks on security baseline, Dahua has constructed a product security layout of “AAA+CIA+P”, forming a hierarchical and system- with the same security requirements. atic security framework covering physical security, system security, application security, cyber security, data security and privacy protection. Wherein, AAA represents Authentication, Authorization, and Audit; CIA represents Confidentiality, Integrity and, Availability; Prepresents Privacy Protection.
As one of important enterprise standards of Dahua, the security baseline is an integral part of Dahua management process of security development life cycle, and has been deeply integrated into the product quality assurance system to make sure default security technology guarantee for the full series of products.
Security Governance (Cyber Security Committee)
Policy and Compliance Strategy and Measurement
SDLC (Security Development Life Cycle) Charter PDR ADR LDR
CDP Launch Concept Design and Planning Development and Test Verification and Release Life Cycle Secure Products and Solutions Continuously Upgraded Security Baseline TR1 TR2 TR3TR4B TR4 TR5 TR6 Security Security Demand Design Security Test Security Release Authentication Authorization Audit Confidentiality Integrity Availability Privacy Protection Realization Penetration Preparation Test Security Inci- Security Baseline Security Baseline Security Baseline Security Baseline Security Baseline Security Baseline dent Response V1.0 V1.1 V1.2 V1.3 V2.0 V2.1 Configuration Management (Security, Consistency, End-to-end Traceability) Security Authentication + Anti-Brute Force + No Default Account + Privacy Protection + Secure Start + Wireless Security Security Training Strong Password Strategy + Session Protection + Built-in Firewall + Firmware Encryption + Encryption Function Restricted/Trusted List + Service Minimizing + Security Shell + Stream Encryption for Optimization Digital Envelope Strategy + Reliable Upgrade Transmission + …… + …… + Custom Permission + Reliable Operating + Secure Alarm Linkage Security Capability Supports Management Environment + Open-source Software + Sensitive Data Encryp- + …… Control Security Technology and Capability tion and Storage + …… Security Tools Security Standards and Specifications Library + ……
Security Governance (Cyber Security Committee) August 2017 May 2018 November 2018 2019
Policy and Compliance Strategy and Measurement
40 41 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd. 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd.
Network Security Guarantee System Customer Data and Privacy Protection
Professional Product Security Incident Response Team Dahua Product Security Incident Response Team (PSIRT) is responsible for management of the security environment and product vulnerabilities in accordance with the industry practices. We offer 7*24 service to respond to global security issues and timely provide security notice and reinforcement services.
Vulnerability Analysis, Verifica- Security Evaluation Disclosure Customer Collection tion and Repair
Internal Customer Vulnerability PDT Dahua PSIRT Dahua PSIRT Library LMT CERT or Other Supplier Stakeholders
Dahua PSIRT Authorization Retention Clear Dahua pays great attention to data security and privacy protection and takes it product demand and design to provide overall specification and guidance on Security Team as one of our guiding principles. Dahua has always been keeping positive and data processing at links including privacy policy, privacy preference setting, data https://www.dahuatech.com/service/network.html practical attitude and develops strategies for Cybersecurity Law of the People's acquisition, data transmission, data storage and deletion. Dahua also integrates Republic of China, GB/T 35273-2017 Information Technology – Personal Infor- data desensitization, data encryption, face obstruction, trusted computing and mation Security Specification, General Data Protection Regulation (EU ,GDPR) other privacy protection technologies and applications into the products. and California Consumer Privacy Act (CCPA), and has established data security and privacy protection committee responsible for closely focusing on global Under guidance from the data security and privacy protection committee, a laws and regulations, conducting compliance audit and positively planning com- As for the management of security issues, Dahua PSIRT adopts SN (Security No- ability Database of Information Security (CNNVD), China National Vulnerability data security incident response handling mechanism is established to realize pliance construction. tice) and SA (Security Advisory) for customer communication to make sure that Database (CNVD), China Cyber Threat Governance Alliance (CCTGA) and other timely protection and decisive handling. Dahua also established a special con- customers are properly informed of such issues at different stages. information security organizations, Dahua plays its full role as a member in re- tact-responsibility mechanism to arrange personnel to explain any questions Dahua is one of the first enterprises obtaining TUV Rheinland Data Security and alizing the working mechanism of cyber threat information sharing and mutual or suggestions on personal data processing from customers. Data Protection Privacy Protection Certificate in the field of global video surveillance. Its IPC, Dahua PSIRT constructs disclosure processes for security vulnerability, security collaboration. Incident Response Team (DPIRT), as the only outlet for disclosure of data secu- NVR, software platform DSS and intelligent server gained Protected Privacy IoT advisory and security notice for all the products in accordance with ISO/IEC rity incidents, is responsible for receiving, handling and reporting data security Product Certificate in 2018. Imou Cloud successfully gained Protected Privacy incidents. 30111:2013 Vulnerability Handling Processes, ISO/IEC 29147:2018 Vulnerability Dahua has developed a worldwide after-sales team. Cyber security issues have IoT Service certificate in 2019. Disclosure and other standards, and encourages end customers, partners, sup- high handling priority in after-sales service. Our cyber security committee and pliers, government bodies, industry organizations and independent researchers PSIRT offer timely incident handling service through the worldwide after-sales Within the reported period, we haven't received any punishment from regula- In addition to such certificates, to further enhance the privacy protection level who find any potential risk/vulnerability to positively report the security vulner- system once security issues occur. tory bodies due to violation of data protection laws and regulations all over the of products and services and better realize compliance for customers, Dahua ability of Dahua products to us. world. has formulated Dahua Personal Data and Privacy Protection Standard based on internal security design principles, personal information security specifications, Dahua PSIRT actively participates in various industry and public activities, and GDRP rules and Rheinland and introduced the privacy baseline at the stage of keeps a positive and open attitude about exchange and communication with government CERT, customer CERT/PSIRT, other suppliers, researchers, and third-party coordination units. By joining Forum of Incident Response and Secu- rity Teams (FIRST), CVE Numbering Authorities (CNAs), China National Vulner-
Positively Build Security Capability Facing End Customers
Cyber security guarantee for products is a systematic project. Cyber security Dahua Technology also carries out relevant security trainings for our partners to requires both technology and management. Dahua Technology takes effort to make sure that they can correctly use the security functions and maintain good offer products and solutions with optimized security state together with part- security habits when integrating or using our products. This measure helps end ners and customers. As a device manufacturer, Dahua Technology takes effort to customers realize a better security state. offer more secure products and guide downstream partners and customers to correctly use these security functions.
Dahua Technology carries out basic security skill trainings and tests on global sales and after-sales technology personnel, to make sure that Dahua security strategies can be accurately passed to customers.
42 43 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd.
Innovation and Research
Innovation is a key driving force and core competitiveness for development of Dahua. We annually input 10% of sales revenue in research and innovation to make us always in the leading position of the industry technology development in order to satisfy ever-changing demands of customers. Dahua Technology has built five research institutes covering advanced technology, big data, central, cyber security and smart city and possesses a national post-doctoral scientific research worksta- tion. As the state-accredited enterprise technology center and national pilot innovative enterprise, Dahua continues to make breakthrough contribution and leads industry development.
MANAGE Advanced Technology Big Data Institute Central Institute Cyber Security Institute Smart City Institute Research Institute Research on AI and Cloud Computing and Storage Core Technology and Equipment, Network, New Smart City Leading Technology Big Data Technology Research New Field Technology Research System Security Technology Top-level Design and Structure Business operation Research Research
AI Technology Cloud Computing Technology IoT Technology Cyber Security Technology City Data Construction and Analysis Innovation and Research
Green Supply Chain
Automatic Control Technology Big Data Technology Engineering Foundation Cyber Security Infrastructure Structure Ingenious Manufacturing Technology Incident Response Design Center Globally Integrated Delivery and Service
Multidimensional Awareness Video Cloud Technology Technology
Working on Innovation and Research universities and has set up joint laboratories with domestic and foreign well- Research capability is one of our most important core competitivenesses and known enterprises on the basis of strategic partnership of “Resource Sharing also a solid guarantee for sustainable and robust growth of our core business. and Win-win Cooperation”, to jointly promote new technological revolution and Through years of researches and practices, we have not only accumulated a positively promote product, technology and management innovation, providing series of internationally leading core technologies and patented technologies, support for our rapid development. created a research process and operation platform supporting our vision and business development, established a research troika with interworking and sup- Participating in Standard Preparation and Release porting among solutions, products and technologies (SDT/PDT/TDT). We have Dahua Technology prepared HDCVI specification which has been accepted by accumulated rich experience in research and patent application and registration international HDcctv organization and AT standard is released based on such and fostered effective research management capability. These advantages have specification. It becomes the first specification in the security industry of China been successfully applied in the research practice of the company, laying a solid to be incorporated into international standards. foundation for long-term sustainable development, and becoming core compet- Dahua leaded and participated ina the preparation of 2 international standards, itiveness. 14 national standards, 35 industry standards, 22 local standards, 6 group and Zhejiang manufacturing standards. Research Strategy and Strategic Target In regards to technological innovation and product research, we adhere to IPD Intellectual Property core concept, and build a strategic management mechanism of strategy plan- Within the report period, Dahua obtains the following achievements in aspects ning (SP), business planning (BP), implementation and monitoring, performance of patent and software copyright. evaluation with market and technology as two driving factors. With continuous optimization of our IPD process, we coordinate with resources of all depart- Category Unit Quantity ments based on research to ensure continuous competitiveness of our products Patent for Invention Pcs 190 and solutions. In realization of solutions and products, we have strengthened Utility Model Pcs 125 quality control over all research stages from project initialization to product New Patent launch, so as to make sure every launched solution and product meets market Design Patent Pcs 91 and customers' requirements. With years of accumulation and input of our re- Total Pcs 406 search system, we have built nine research centers to improve research quality New Software Copyright Pcs 81 and efficiency. New Registered Trademark Pcs 163 New Patent Pcs 436 Industry-University-Research Cooperation New Patent Pcs 518 Dahua takes the lead in building post-doctoral scientific research workstation in Accumulated Patent the industry to set up high-end talent cultivation base, and facilitate external re- New Patent Pcs 428 source utilization by introducing international advanced technologies, cooperat- New Patent Pcs 1382 ing with customers and suppliers as well as universities and colleges, and intro- Accumulated Software Copyright Pcs 827 ducing informationized software. Dahua cooperates with national well-known Accumulated Registered Trademark Pcs 508
45 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd. 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd.
Green Supply Chain
Construction of Supply Environment Construction of Business Compliance To make sure healthy and rapid development, Dahua Technology works on creating a stable and high-quality supply chain and adheres to the concept of “Fostering, The Supplier Collaboration Platform (SCP) realizes standardization of the whole purchasing process and informatization of the operation, offers high efficiency, avoids Accompanying, Growing” for supplier development and management. At present, we have 902 suppliers worldwide, forming a comprehensive security supply envi- idle items, and reduces compliance risk. ronment.
Supplier Management Material Selection Purchasing Price Performance Purchasing Order Management Management Management Management • Provide multiple self- • Set an approval baseline • One-stop inquiry and quotation • Set material assessment • Management of automatic switch New Component Affirmation recommendation channels such for new materials, and management standards by classification. from PR to PO. as email, website, and Wechat identify new material • Annual bidding plan of standard • Transparent three-way • Management of PO approval • Select in a pool of included suppliers. public account, to make progress delivery and cost control products supplier evaluation. authority. • New component affirmation process. visualized. risk in advance. • Bidding platform • Track performance • Management of PO approval Inclusion Review • Set supplier approval baselines by • Promote construction • Performance-based quota improvements. cancellation. • Classification standard classification. of the common material • Cost analysis on key materials and • Manage time of validity for • Management of PO delivery time • Approval by three-way evaluation. library. scientific cost reduction specially-permitted suppliers. collaboration platform. • Quality red line • Manage key supplier processes. • APS alarm for PO delivery and oder Classified Management • Key process capability schedule. • Fair and transparent evaluation by the Research De- • Set management rules according partment, the Quality Department and the Purchas- to material classification. ing Department. • Implement cooperation strategies Solution to Conflict Minerals according to supplier classification. Dahua Technology keeps fulfilling its social responsibility as an enterprise citizen, adheres to ethical sourcing, and promote sustainable development of the industry Supplier chain. management Not purchasing and using conflict minerals is our corporate social responsibility. We will do our best to make sure that we only purchase and use conflict-free miner- als in the supply chain in a commercially reasonable range. According to Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and Unannounced Inspection High-Risk Areas of Organization for Economic Cooperation and Development (OECD), Dahua Technology continuously and comprehensively manages any potential risks in the supply chain, and assists the suppliers in purchasing and using conflict-free minerals with the help of the “conflict minerals plan” provided by Responsible Key Process Management of Key Com- Minerals Initiative and relevant resources. We ask suppliers to: ponents • Sign Declaration of Minerals Conflict-Free to make sure that the products supplied to Dahua and its Affiliates contain no conflict minerals or metals. • Sort out core processes for core components and Monthly Performance Evaluation control manufacturing process quality. • Fill in Conflict Minerals Reporting Template (CMRT) to actually disclose information about origins of minerals, used smelters and refineries and their downstream • Monthly three-way assessments on data and result announcements (fairness supply chains. • Share data about supplier quality (before delivery). and transparency), and systematic reward and punishment. • Offer support • Manage secondary suppliers of bulk materials and • Make due diligence plans for themselves, and policies of conflict-free minerals purchasing. and reduce CD suppliers. core materials. • Provide conflict-free minerals compliance documents of the products as required by Dahua. • Forced elimination mechanism. Dahua carries out periodic investigation on the suppliers. If any information provided by the suppliers fails to be verified or suppliers do not take effective measures to comply with the conflict minerals policy of Dahua, Dahua reserves the right to terminate cooperation with the suppliers.
Dahua guarantees supply from the conflict-free smelters. We also offer training and guidance on the supply chain to further raise their awareness on the conflict minerals laws and regulations, and effectively avoid any conflict minerals to be used in the supply chain through cooperation with customers, business partners and Construction of Material Supply Security the government and by promoting smelters to join in Responsible Minerals Assurance Process (RMAP). In the face of complicated foreign environment and challenges, material supply security has been upgraded to a strategic action item of supply chain and has been promoted in terms of agreement acceptance, diversified supply resource, refined supply management and optimized supply and demand planning.
Cooperation Agreement Constraint Continuously Refining Supplier Management • Before cooperation, Dahua and suppliers must sign purchasing agreements: • Supplier Approval management: Different approval review mechanism for Framework Agreement for Material Purchasing, Supply Quality Assurance different material types + baseline management + specially-permitted approval Agreement, PCN Agreement, and Environment Protection Commitment. control. • Supplier performance management: Refine supplier performance evaluation Eco-friendly Materials Purchase Conflict Minerals Management standards and policies of reward and punishment. • Supplier process quality control: Sort out and precontrol raw materials of key components, bottlenecks of key manufacturing processes, and quality risk • Establish management process and environment certification program. • Sign Declaration of Conflict-Free Metal with suppliers.
Continuously Promoting Rationality of Supplier points. Suppliers should make declaration of compliance for ROHS. Resources • Supplier targeted support: Organize targeted support for suppliers of the cus- tomized components (the supplier targeted support plan was initiated in 2017). • Promote the localization rate of materials: Give priority to domestic brands Compliance for materials in the new product selection library, and form strategic coopera- Integrity and Honesty tion with domestic mainstream suppliers of components. Protection of Human Rights Continuously Promoting Strategic Supply and Demand Planning • Optimize the supply range of suppliers of customized components: Distance • Cooperative suppliers agree to comply with the local regulations on • “Sunshine Purchase” system: Code of Conduct for Purchasing from suppliers to Dahua is preferred to be included in baseline management • Boost supply and demand collaborative integration plans among customers, and control. Dahua and suppliers. human rights. Personnel, Administrative•Measures•for•Reporting•Corrupt•Practices, • Enhance the secondary supply proportion: Stably enhance the proportion. • Implement different strategies on purchasing, material preparing and Audit of human rights situation shoall be conducted for suppliers and Anti-Fraud System. • Local production overseas: Accelerate local material purchasing in overseas production by product segmentation and material classification. supply centers. • With ERP+SCP linkage, automatically assign purchasing orders based on annually. • Swap system of personnel in high-risk department. matching of alternatives and the supply resources set at different levels. • Sign Integrity Agreement with suppliers.
46 47 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd. 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd.
Green Supply Chain Ingenuity and Intelligent Manufacturing
Interaction and Win-Win Cooperation Achieve customer success based on the customer demands. Depending on strong manufacturing strength and solid whole-process quality system, and to provide Dahua establishes multiple interaction ways with the suppliers, jointly building a healthy partnership. strong support for high-quality product and service delivery, Dahua adheres to “ingenious spirit” to create China intelligent manufacturing, continuously delivering value to customers.
Construction of Integrated Supply Chain
With the help of Dahua information system and integrated planning system, the product supply and service Win-Win Cooperation response capability is promoted through resource integration and highly efficient collaboration among design, procurement, production, sales, and service. In addition, the company constantly promote construc- Strategic Suppliers Growing with Suppliers Supplier Conference Quarterly Business Other tion of the global supply network. With its headquarter in Hangzhou, Dahua has established regional supply Review (QBR) • High-level exchanges. • Targeted guidance • Share information on Dahua • Technical sessions. centers in Hungary and Mexico, and regional hubs in Netherlands, Dubai and other core logistics distribu- • Sign mutual strategic coopera- • Unannounced inspec- strategic development. • Review performance • Joint design to improve quality and tion centers, forming a multilevel supply network. tion agreement. tion • Commend and inspire excel- and improvement mea- reduce cost (structural parts). • Technical and commercial • Cooperation with QC lent suppliers. sures, and enhance • Share professional automated pro- communications as required by group • Cooperation vision and communication and duction technologies (MTF technology, both parties. • Financial support discussion. cooperation. dispensing technology). Targeted Intelligent Manufacturing Strategy
Through targeted planning, purchase, manufacturing and logistics, we develop 2025 Dahua intelligent man- ufacturing strategy on the basis of refined operation. Dahua intelligent (IoT) industrial park adopts not only the industry-leading manufacturing equipment, but also a series of self-developed automated equipment Supplier targeted support plan: Dahua initiated this plan in 2017 to help improvement of the suppliers in plan management, production and manufacturing, quality for different mass production modes, such as automated assembly workstation, machine vision inspection control and other aspects and guarantee product quality and stable supply. With implementation of this plan, CD (to be improved) suppliers decrease year by year. equipment, fully automated product test platform, AGV, and robot. With the international advanced infor- 10 suppliers have been improved with Dahua's support in 2020. mation platform and digital technology, it has basic capability on information perception, executive control and data decision to realize efficiency promotion and quality control.
2018 31 Reliability Laboratory 2019 24 Dahua reliability laboratory has obtained CNAS Certificate and IEC CTF2 Certificate and satisfies all test requirements to maintain a high-quality work condition in the environments with different temperatures, 2020 10 humidities, sand and dust, and salt-spray, and vibration.
Whole-Process Quality Control System Honorary Title of “Zhejiang Provincial Incubation Base for Advanced Quality Management” The strict whole-process quality control system guarantees refining of quality management process, promotes high quality development and helps customers To play an advanced and exemplary role of an enterprise with quality award and positively fulfill social responsibility, Dahua carried out one-year quality guidance achieve continuous success. and improvement activity for 12 key suppliers. Under the joint efforts of members in the project group and positive cooperation with the suppliers, we successfully completed the improvement activity and applied for Zhejiang advanced quality management project. Through document review, site assessment, voting and public- Sales Quality Research Quality Purchasing Quality Manufacturing Quality Delivery and Service Quality ity, the activity finally passed project review and acceptance of Zhejiang Provincial Bureau of Quality and Technical Supervision with first in total points and won the honorary title of “Zhejiang Provincial Incubation Base for Advanced Quality Management.”
Customer Satisfaction-Based Process-Based Quality Control Risk-Based Quality Control Culture-Based Quality Control The incubation base is a public service platform to promote and apply advanced quality management methods, guiding incubated enterprises to adopt such meth- Quality Control ods to improve the management level through quality training, quality diagnosis, demonstration and popularization and other measures. Since Zhejiang Provincial Bureau of Quality and Technical Supervision carried out the activity of provincial incubation base for advanced quality management three years ago, only five enter- • Focus on customer de- • Integrate the quality stan- • Recognize quality risks in main • Customer-oriented and striver-cen- mands and expectations. dard into LTC, IPD, ISC, ISD, and business processes and set a red tered. prises won the title in Zhejiang. Dahua is the first enterprise in the industry to win the title. • Deeply dig pain points and ITR. line for quality security. • Provide convenience for cus- demands of customers. • Focus on process quality • Establish a root cause back- tomers, with complicated matters • Horizontal comparison in and outcome quality. tracking and prevention mecha- resolved by ourselves. the industry, and internal com- nism, and continuously perfect • Quality is no small matter. Every- munication and improvement. the process quality standard. one is liable for quality issues.
Quality Management System + Quality Improvement Platform
48 49 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd. 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd.
Ingenuity and Intelligent Manufacturing Globally Integrated Delivery and Service
Green and Efficient Manufacturing With the purpose of strategy realization, we continuously promote the construction of intelligent and efficient supply chain. Dahua supply chain has become one Dahua can offer professional and quick delivery and service in the whole process and has established integration business center, O&M service center, design devel- of our core competitiveness. As an enterprise with a sound sense of social responsibility, Dahua Technology has a mission of “Enabling a safer society and smarter opment center, technical service center, training certification center and customer service center for the global business, to provide solution delivery and service in living” and focuses on green manufacturing in development when promoting economic development of our company to reduce influence on environment and maxi- the full life cycle for customers and create a world-leading efficient and professional delivery and service platform. mize the use of recourses in the full life cycle of product from product design, purchase, manufacturing, packaging, transportation, using to scrap processing. 4000+ Integration of Manufacturing Digitalization, Manufacturing Automation, and Manufacturing Informationization 2+120 Project Managers and 1000+ With continuous improvement of the industrialized big data cloud platform, manufacturing digitalization, manufacturing automation, and manufacturing informa- Parts Centers Technical and Service Service Partners tionization are integrated. Fully digital manufacturing control over the manufacturing process has been basically fulfilled through coordination of standard digital in- Personnel terfaces on hardware facilities, which comprehensively acquires and collects process parameters and device operation, quality inspection, material delivery, progress management and other data at the production site, to achieve interconnection of process, production, quality, equipment, energy consumption and other data in all Professional Contracting systems, forming interconnection of “people flow, material flow, product flow, engineering flow, and information flow”. The strategic target of “Intelligent Park, Smart Information System Manufacturing, Intelligent Logistics” is realized gradually by integrating agile collaboration among all units in the supply chain, operation standardization and high National Commodity of Electronic and efficiency, process visualization, and decision digitalization. After-Sales Service Integration and Service Intelligent Engineering Five-Star Certification Class I Certification Class I Certification Manufacturing Automation Manufacturing Informationization Based on the product classification and features in manufacturing technology, Dahua integrated informationization system has fully covered main business Capability on Design, the industrial park is divided into six factories, with each implementing its own processes, including CRM and B2B system for customer collaboration, product National ITSS International Construction and strategy. The PCBA factory, a first-class professional factory with high auto- life cycle management (PLM), enterprise resource planning system (ERP), in- Class II Certification ISO20000 Certification mation level, has 30 world-leading automatic production lines; the other five tegrated supply chain platform (SCP), advanced planning & scheduling (APS), Maintenance for machine factories are equipped with more than 500 sets of automatic flexible product data platform (PDM), production management system (MES+), ware- Security Engineering production equipment developed by Dahua, and extensively adopt indus- house management system (WMS), and transportation management system Enterprise try-leading technologies like industrial robot, intelligent camera, customized (TMS), to realize management of “Visualized order-delivery process; online Class I Certification AGV and unmanned testing. Substituting automatic production for labor makes manufacturing and quality management; refined logistics distribution; collabo- efficiency rise by 10%-40% and solves the problems of high labor demand, rative upstream and downstream of customers and suppliers.” inconsistent product quality and low work efficiency in the mode of traditional manual operation. Global Service Network The headquarter, its branches, and the authorized service stations form a multidimensional service network to offer services to our global customers, improving the Manufacturing Digitalization service experience and customer perception and continuously enhancing the overall service satisfaction. Since 2016, Dahua has gradually promoted the smart manufacturing strategy to improve the production efficiency and the production environment and realize automation. With deepened reform and effective increase, Dahua positively facilitates digital transformation into an enterprise of “Internet + Manufacturing.” Dahua Life Cycle Delivery and Service System intelligent industrial park not only adopts the industry-leading manufacturing equipment, but also a series of self-developed automated equipment. With the inter- With four systems as support, we builds a global, efficient and professional service platform to offer efficient, standard, professional end-to-end deliveries and ser- national advanced information platform as pivot and by means of digital technology, efficiency promotion and quality control are realized. Dahua was awarded the vices including consultation and design, integration and delivery, operation and maintenance, training and certification, quality and after-sales, continuously deliver- “Smart Manufacturing Pilot and Demonstration Project Unit” of National Ministry of Industry and Information and “Hangzhou Factory IoT Pilot and Demonstration ing service value to customers. Project Unit” in 2018, “Hangzhou Modern Supply Chain System Construction Pilot Unit in Circulation Field”, “Zhejiang Digital Workshop”, and “Smart Factory Project Dahua gives response to any customer problems involving consultation, failure, and complaint within 30 minutes and the responsible department gives handling Unit” in 2019. suggestions within two hours. During the past three years, year-by-year decrease in the complaint rate indicates good relationship with our customers. For different customers at home and abroad, Dahua provides differentiated services and service channels to ensure effective relationship maintenance with our customers.
BDP-BI OA Aid Decision Integrated Business Data Platform
Daily Management Operation ERP PLM CRM/B2B Management Enterprise Resource Product Life Cycle Customer Relation Plan Management Management -
Email SCP -
APS MES+ WMS TMS HCM Office Procedure Supply Chain Advanced Planning & Manufacturing Warehouse Transportation Human Capital Management Scheduling System Execution System Management System Management System Management -
Process Control SystemSCP (PLC, RCS, WCS) Message Platform -
Document AGV, Automatic Transmission Line, SmartSCP Shelf, Machine Vision and Other Equipment Management
50 51 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd. 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd.
Key Performance Indicators for Sustainable Attachment 1: Enterprise Honor Development
Category 2017 2018 2019 Name Presented by Name Presented by
Security and Quality Social Responsibility Technological Innovation
Number of Major Security and Environmental Accidents 0 0 0 Zhejiang Province Industrial and National Intellectual Property China Patent Excellence Award Number of Major Quality Safety Accident 0 0 0 Commercial Enterprise Credit Grade Hangzhou Administration for Industry Administration, PRC AA Contract keeping and Credit First and Commerce National Intellectual Property National Intellectual Property Training Company Demonstration Enterprise Administration, PRC Social Responsibility—Excellent Brand Organizing Committee of Social Second Class of National Technological The State Council of the People’s Per Capita Training Hours (Internal Self-Study Course Included) 44.26 29.6 35.25 Award Responsibility Committee Invention Award Republic of China Training Satisfaction (Full Score 5) 4.73 4.77 4.84 Contract keeping and Credit First Zhejiang Provincial Administration for Zhejiang Science and Technology The People’s Government of Zhejiang Company Industry and Commerce Progress Award Employee Public Welfare Contribution— Hangzhou Department of Safety and Security, Number of the Disabled 3 3 3 Outstanding Contribution of Safety Industry Position Hangzhou Municipal Education Bureau Education for Primary and Secondary Per Capita Travel Cost (RMB Yuan) 1000 1000 1000 2019 Top 50 Global Security Students A&S Incidence of Occupational Disease 0 0 0 Companies Zhejiang Quality Education Base of Zhejiang Administration for Market No. 2 in Global Video Surveillance Primary and Secondary Schools Regulation IHS Markit Environment Market in 2019 Zhejiang Provincial Incubation Base for Zhejiang Administration for Market 2019 Top 100 Enterprises in Advanced Quality Management Regulation Energy Consumption Density (TCE/Million of Income) - 0.314 0.305 Comprehensive Competitiveness of China Information Technology Industry Comprehensive Energy Consumption (TCE) - 7437.4 7949.6 2019 China Best Employer Award ZPIN Software and Information Technology Federation Advanced Unit of Promoting Industry China Quality Management Association Service Direct Energy Consumption (TCE) - 5215.3 5889.3 Green Development For Electronics Industry 2019 (33th) China Information Technology Industry Indirect Energy Consumption (TCE) - 2222.1 2060.3 China Top 100 Electronic Information Federation Enterprises Total Greenhouse Gas Emissions (Tons of CO2) - 35161 37743 Manufacturing and Service Number of Fire Incidents 0 0 0 2019 100 Cases of Ministry of Industry and Information “Belt and Road” in Electronic China Information Technology Industry 0 0 0 Number of Illegal Operations Single Champion Demonstration Technology of the People’s Republic of Information Industry Federation Control Rate of Particulate Matters (%) 100% 100% 100% Enterprise in Manufacturing Industry China, China Federation of Industrial —Excellent Project Control Rate of Noise at Boundary (%) 100% 100% 100% Economics China Top 100 Intelligent Integrated Per Capita Electricity Consumption (KW) 3159 3417 3470 A & S Security Enterprises Per Capita Water Consumption (T) - 3417 3470 A&S China Top 100 A&S Top 10 Security Brands in China A&S A&S Fuel Consumption (L) - 102000 84906 Intelligent Integrated Enterprises —Top 10 Brands of “Anti-theft Alarm” Natural Gas (m3) - 1137479 1169228 Zhejiang Digital Warehouse and Economy and Information Technology A&S Top 10 Security Brands in China A&S Qualified Rate of Fume Emission (%) 100% 100% 100% Smart Factory Project Unit Department of Zhejiang —Top 10 Brands of “Access Control” Recyclable Waste Five-Star Service Certification Beijing Biaoyuan Certification Center A&S Top 10 Security Brands in China —Top 10 Brands of “Application in AI A&S 2019 China Top 100 Enterprises of China Council for International Invest- Industry” Plastics (KG) - 57501 81856 Digital Service and Service Outsourcing ment Promotion 114007 A&S Top 10 Security Brands in China Metal (KG) - 271927 A&S —Top 10 Brands of Video Surveillance Carton (KG) - 612356 531340 Quality General Industrial Waste (KG) - 16247 38588 Other (Cable, Light Panel, etc.) (KG) - 71188 95298 Ministry of Industry and Information National Quality Benchmark Technology of the People’s Republic of Hazardous Wastes China National Quality Inspection Advanced China Association for Quality Total Amount of Hazardous Waste (T) - 2.21 3.64 Enterprise Inspection Democracy and Public Welfare National Advanced Unit of Implementing Performance Excellence China Association for Quality Model Ethic Complaints 0 0 0 National Quality Inspection Stable China Association for Quality Total Public Welfare Support Cost (RMB Yuan) 2062404 834736 16778522 Qualified Product Inspection Coverage Rate of Domestic Union Members (%) 100% 100% 100% Hangzhou Municipal Quality Award Hangzhou Municipal Government Coverage Rate of Overseas Union Members (%) 100% 100% 100% National Quality and Credit China Association for Quality Number of Volunteers 98 123 156 Benchmarking Enterprise Inspection National Product and Service Quality China Association for Quality Integrity Demonstration Enterprise Inspection Outstanding Promotion Unit at 40th Anniversary of Total Quality China Association for Quality Management Promotion
52 53 2019 Environmental, Social and Governance Report of Zhejiang Dahua Technology Co., Ltd.
Attachment 2: Index Table ofGuide of Sustainable
Development Report (GRI Standard)
No. Disclosure Item Page No. Disclosure Item Page
Organization Overview Economy
About This 201 P10 102-1 Organization Name Economic Performance Report 202 Market Performance P10 102-2 Activity, Brand, Product and Service P4-9 203 Indirect Economic Impact P7-8 102-3 Headquarter Location P4-9 204 Purchasing Practice P46-48 102-4 Operation Place P4-9 205 Anti-Corruption P38 102-6 Service Market P4-9 206 Unfair Competition Behavior P37 102-7 Organization Size P4-9 Information about Staff and Other 102-8 P21-22 Environment Workers 102-9 Supply chain P46-48 301 Material P29-33, P52 「ENABLING A SAFER SOCIETY AND SMARTER LIVING 」 Strategy 302 Energy P29-33, P52 303 Water Resource P29-33, P52 102-14 Statement of Senior Decision-Maker P3 305 Emission P29-33, P52 Ethics and Integrity 306 Sewage and Waste P29-33, P52
Value, Principle, Standard and Code of 307 Environmental Compliance P29-33 102-16 P2 Conduct 308 Supplier Environment Evaluation P31, P46-48 Mechanism of Ethic 102-17 P37 Suggestions and Concerns Social Governance 401 Employment P21-27 102-18 Governance Structure P35 403 Occupational Health and Safety P23-25, P27 404 Training and Education P22 Interested Party Participation 405 Diversification and Equal Opportunity P21-22, P26-27 102-40 Group List of Interested Party P35-36 406 Anti-Discrimination P26-27 102-41 Collective Bargaining Agreement P35-36 Freedom of Association & Collective 407 P26-27 Reorganization and Selection of Bargaining 102-42 P35-36 Interested Parties 408 Child Labor P27 102-43 Interested Party Participation Policy P35-36 409 Forced or Compulsory Labor P26-27 410 Security Practices P25 Report and Practice 413 Local Community P17-19 Entity Covered in Consolidated Financial About This 102-45 414 Supplier Social Evaluation P46-48 Statement Report 416 Definition of Report Content and Issue About This Customer Health and Safety P39-42, P49 102-46 Boundary Report 417 Marketing and Identification P49, P51 102-47 List of Substantive Issues P13, P35-36 418 Customer Privacy P43 About This 102-50 Reporting Period 419 Social Economic Compliance P37 Report About This 102-52 Reporting Cycle Report About This 102-53 Contact Information on Report Issues Report 102-55 GRI Content Index P54 Management Method
Description of Substantive Issue and Its P11, P13, P35- 103-1 Boundary 36 Management Method and Its P11, P13, P35- 103-2 For more information of Dahua Component 36 Please follow our WeChat account P11, P13, P35- 103-3 Evaluation on Management Method 36
Zhejiang Dahua Technology Co., Ltd. | Address of the headquarters: No.1199, Bin'an Road, Binjiang District, Hangzhou, China | Stock code: 002236 | Website: www. dahuatech.com | Service hotline: 400-672-8166
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